Perhaps many of us who have ambitions want to become financially stable. We can, of course, do it through hard work, savings, and investing our money in things that promise us good returns. As for investing our money, we should have enough knowledge about it and the various types of investments.
Investing is the way in which you contribute your money to various business ventures with the opportunity of getting a good return of your money. As long as you have the money, you can invest it to get profit.
However, a particular type of investment has its financial risks, and that is why you should know about the types of low-risk investments that have a modest return on investments for to have a stable income. For you to get started, here is a list of the various types of low-risk investments that you should know.
Fixed annuities are annuity agreements between an insurance company and an investor. This type of low-risk investment is for those conservative retirement savers who want a good return on their investments with the security of principal.
Fixed annuities have excellent features such as allowing the investors to contribute their money allowing it to increase free of tax until they retire. Many people considered this type of investment as low-risk because the annuity contracts typically came from fixed annuity carriers.
Money Market Funds
Money market funds are an assortment of a certificate of deposits, short-term bonds, and other low-risk investments. If you choose this type of investment, you will now acquire diverse financial assets without having to worry too much about the security of your money.
Money market funds are accessible, and the good thing about this investment is that you can withdraw your investment without the additional charges anytime. Brokerage firms and mutual fund companies offer this type of low-risk investments.
Preferred stock is a type of hybrid security investment that has trading processes the same as stock investments but acts more like a bond in a lot of ways. This type of investment has dividend rate statement that goes as much as 2 percent higher than the certificate of deposits or treasuries.
You can get your return on investment via preferred stock monthly or quarterly, and there is the chance to make the dividends into capital gains. If you are looking for an investment that provides low liquidity risk, preferred stock is for you. You can also sell it anytime without penalty hassles.
Brokered Certificate of Deposit
Brokered certificate of deposit is a type of investment bought not from a bank but a brokerage firm or a sales representative. This type of investment is low-risk, and it is perfect for would-be investors who do not want to lose their investments.
Perhaps the only disadvantage about brokered CDs is that they do not pay a high return on investments like preferred stocks. But they are still the go-to option for many small investors. What is more, brokered CDs can be marketed with other fixed investments.
Real Estate Investment Trusts
Real estate investment trusts or REITs is the type of investments in the form of mutual funds invested in various real estate ventures. Typically, an investment such as this one is contributed to commercial real estate endeavors such as shopping centers, office buildings, or apartment complexes.
Yes, through real estate investment trusts, you can now invest your money in different real estate projects in different locations.
REITs are sure to provide you a good return on your investment because there is an excellent chance that a particular city or state has a profitable real estate market. However, before you enter into this type of investment, it is essential that you consult real estate firms for you to widen your knowledge about REITs. Some investment opportunities help you to save tax as well. You can consult a CPA firm for tax planning before chipping in with your investment.
Investing your money and resources is one of the ways for you to become financially stable. However, you should be wary of the risks that involve a particular type of investment. That is why you should start in investing your money in an investment that offers robust security and good returns on your money.
You can take some cues from the list of the types of low-risk investments above, or you can consult business financing firms like Ashe Morgan.