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These Low-Risk Investments Are Perfect For The Scared Investor
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These Low-Risk Investments Are Perfect For The Scared Investor

Losing money doesn't have to be your story.

Finance

If thinking about investing in the stock market gives you major anxiety, you're not alone. Before completely writing off anything having to do with investing, make sure you're aware of all of your options. Investopedia surveyed 1,405 affluent millennials and discovered that 40 percent of respondents agreed that investing in the stock market was "risky" and almost a quarter claimed that it was overwhelming. This is unsurprising with the investing horror stories detailing the hundreds or even thousands of dollars naive investors lost, but that doesn't have to be your story.

Various investment options are low-risk or even zero-risk, but when you take on less risk you'll probably have lower returns. As long as you're willing to offset your investment growth on the premise of safeguarding your initial investment, then you have several options at your disposal.

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Certificates Of Deposits

If you're feeling a bit apprehensive about investing in stocks and bonds, but yearn to make more money than holding your money in a standard savings account, then purchasing a certificate of deposit (CD) can be a great investment to start with. Certificate of Deposits are products provided by credit unions and banks that pay customers not to use a lump-sum deposit for an agreed-upon period. In return, these institutions offer an interest rate premium.

Before rushing to purchase a CD at just any bank, brokerage firm, or credit union, you should know that all certificates of deposits are not the same. Shop around a bit to find the financial institutions that offer the highest interest rate premiums, so you can have higher gains on the same lump-sum of money you were going to invest in CDs anyways.

Treasury Notes, Bills, & Bonds

Without a doubt, Treasury notes, bills, and bonds are some of the safest investments because they're guaranteed by the U.S. government. Yes, that's right. Uncle Sam guarantees to pay back your principal with interest on top. Cha-ching! The Treasury Department auctions all notes, bonds, and bills with a fixed-interest rate, which is an interest rate with a set amount of interest on a line of credit or loan. While there is a high demand, bidders will pay more than the face value to receive the fixed rate, and vice versa when demand is low. When an investor holds treasury security until term, they'll receive the face value back, as well as the interest paid by the issuer over the life of the bond.

Treasurys have the lowest interest rates of all fixed securities. These securities are risk-free, but low-risk brings lower interest rates, decreasing your potential for larger returns on your investment.

What exactly is the difference between all three Treasurys? They differ because of lengths of maturity, essentially the Treasury notes are distributed for terms of two, three, five, seven, and ten years. Treasury bonds are only issued for terms that are less than a year, while Treasury bonds have the longest length of maturity with a term issuance of 30 years!

High-Yield Savings Account

A high-yield savings account is for the woman who is saving for a rainy day, so she needs to have quick access to her emergency fund. Unlike other savings account options, high-yield savings accounts allow up to six withdrawals without incurring any penalty fees! The lack of long-term commitment is a great plus for any low-risk investor who fears losing access to their savings when they need it the most.

According to CNBC, the top five high-yield savings accounts' annual percentage yield (APY), or rate of return, is at minimum 10 times more than the 0.04% national average APY offered for traditional savings accounts. A simple switch from a traditional savings account to a high-yield savings account would offer a higher rate of return, while still providing zero risks.

Money Market Accounts

Money Market Accounts (MMA) are similar to traditional savings accounts and high-yield savings accounts because they're a type of deposit account that earns interest. Banks and credit unions issue money market accounts that are federally insured up to $250,000 per depositor, so there's no need to worry about losing your funds.

MMAs typically require a higher minimum balance, but sometimes offer higher interest rates than the traditional or high-yield savings accounts depending on the issuer. The major difference between Money Market Accounts and other savings accounts is the ability to use a debit card or check to make purchases.

Also, keep in mind many issuers charge fees if you max out their withdrawal limit for the month.

Now that you have the proper knowledge about low-risk investment opportunities, you're equipped to figure out which low-risk investment is right for your specific needs. Investing doesn't have to involve a roller coaster of emotions like many think, as long as you make strategic investments to control the amount of risk you're willing to take on.

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My knee-jerk reaction, of course, comes from years of watching film and TV that have exploited Black trauma onscreen and were created with little (if any) consideration for what could emotionally trigger the Black audience. The 1955 murder of Emmett Till is so heartbreaking and inherently violent; would this film make us live through that violence on screen?

Fortunately, no!

This week, before watching Gina Prince-Bythewood's incredible The Woman King, a featurette for Till played in place of a trailer and it soothed my fears.

"There will be no physical violence against Black people on screen," the film's award-winning director and co-writer Chinonye Chukwu says in the featurette. "I'm not interested in relishing in that kind of physical trauma. We're going to begin and end in a place of joy," she says.

Starring Danielle Deadwyler (whose heartfelt performance on HBO's Station Eleven stole the show) as Mamie, Till is a celebration of Mamie's tireless activism which sparked the civil rights movement that continues today and ultimately culminated in President Biden signing the Emmett Till Anti-Lynching Act into law just a few months ago in March 2022. "Mamie Till Mobley is a hero," says Alana Mayo, president of Orion Pictures, the production company behind the film. "I'm really, really committed to making movies not just by us, but for us," Mayo says in the featurette.

After a private screening of Till, this week, Trayvon Martin's mother, Sybrina Fulton, tweeted that the film was "#Powerful" and "a must see."

Mamie's story of courage in the face of unspeakable tragedy deserves to be told--especially as we continue the fight for civil rights today. Knowing that the Black filmmakers behind the film are centering Black joy and aiming for our empowerment through the film makes a world of difference.

TILLis in theaters October 14.

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