Quantcast

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.

Shutterstock

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.

Are you a member of our insiders squad? Join us in the xoTribe Members Community today!

Featured image by Shutterstock

It looks like Erykah Badu and the man in her life are getting pretty serious. The “Bag Lady” singer sparked engagement rumors to 27-year-old artist JaRon Adkison after she shared a sweet message along with a photo dump that included a photo of the couple wearing matching rings.

Keep reading... Show less
The daily empowerment fix you need.
Make things inbox official.

My favorite time of year, coat season, is officially warming up and I’m looking forward to bringing the hottest looks this fall/winter. Getting a late start, it took me a while to narrow down my top preferences and decide which of these 2021 outerwear trends I’ll be wearing this year and hopefully next. From puffers to long line trench coats, it feels like the options are limitless when stalking the net for your next purchase but it's the styles that stand the test of time that make it all worth it.

Keep reading... Show less

OK so, every season, without fail, our skin needs a little tweaking when it comes to our skincare routine. And now that things are finally at the point where we wake up and there is frost on our car windows and we need to put an extra blanket on our bed at night, I thought I would share a list of 10 things that your skin is really needing you to take note of right now, so that it remains looking fresh, soft and beautiful all fall and winter long.

Keep reading... Show less

Tamera Mowry-Housley is giving fans a little glimpse into her time during The Real. The veteran actress was one of the original hosts on The Real, a talk show on Fox that premiered in 2013. After seven years, Tamera announced her departure from the show in 2020, which shocked many fans. In the announcement, she thanked her former co-hosts Adrienne Bailon Haughton, Jeannie Mai and Loni Love while revealing she was going to use her extra time to spend with family and focus on new projects.

Keep reading... Show less

A couple of years ago, I wrote an article for the site entitled, "Why You Should Stop Faking Orgasms ASAP". I'm pretty sure that you can tell from the title that I'm not particularly a fan of faking it. In fact, back in my "getting it in" days, I would have no problem letting a guy know that if he needed more motivation (cue Kelly Rowland) to get me to where I wanted to go. I was down for that more than acting like he was doing what needed to be done. Still, between all of the counseling that I do, the conversations that I've had and the research that I've done, I am more than just a little bit aware that a whopping 80 percent of women have faked orgasms and 1 out of 4 guys do it too (just because a man ejaculates, that doesn't mean he climaxed; that's another topic for another time, though).

Keep reading... Show less
Exclusive Interviews

'David Makes Man' Star Arlen Escarpeta Believes Love And Accountability Go Hand In Hand

"While we are quick to judge others, we really have to look at ourselves and call out some of the things that we do."

Latest Posts