As living expenses continue to rise, it is really important that we invest, and we would want our hard-earned cash to make high returns without too much risk.
Losing money is never a good thing nor does it feel good. That is why investors engaged in low-risk investments as these are usually safer than the stock market and can even pay higher returns.
When it comes to investing with a low-risk type of appetite, you will have a broad range of choices which may confuse you when trying to decide which is suitable for you. Here is a list of low-risk investment options that allows you to earn high returns.
These stocks tend to be less risky than growth stocks as these businesses are already established. Not only have they been present longer than other companies, they also typically well-known for paying dividends as well as the possibility of stock-price appreciation.
It also one of the simplest ways to squeeze a bit more return out of your stock investments, since you just have to basically aim for stocks that has excellent dividend returns.
If two stocks are performing similarly over a given time, but one does not have a dividend and the other pays about 6 percent a year in dividends, then in that case, the second one is the more preferable choice.
Another significant advantage of dividend-paying stocks is they let you to take part in capital gains. That is besides the dividend returns you have received.
Although they may hold up in the future, the combination of capital dividend returns plus capital gains can offer remarkable long-term investment outcomes.
Another dividend-stock type is preferred stock. As the name suggests, stocks with preference ahead of common stocks. This is the kind that companies issue that trades like a stock, but acts like a bond in various ways. They tend to have more predictable dividend income as well.
In terms of rights, these stocks have more privilege on the business’ profits and assets than common shareholders do. If a company declares a dividend, preferred shareholders should be paid before common shareholders.
Having a preferred stock standing is also vital in times of trouble, such as when the company is caught in a tight spot and is facing the possibility of liquidation. In the event that the group completely suspended its dividend, preferred stockholders must be given dividend returns ahead of common stockholders.
Peer-to-Peer Lending (P2P)
To put it briefly, P2P lending is when a person pulls out loans from companies that join potential borrowers with individual investors, who are willing to lend them their own money. It is a new way of debt financing that lets people to borrow and lend money without an official financial institution.
You are lending your money to someone else with the hope that they will pay you back. It is up to you, the lender, to decide on whether you want to loan a portion or all of the money the borrower is asking for.
Splitting your loans poorly in P2P can be extremely risky, that it is why you have to choose top-rated loans to secure a proper and nice return, with little risk on your part. This type of low-risk investment also has less volatility and small correlation. It offers higher returns than usual sources of yield as well.
With the right financial advisor, annuities can provide great high returns. This low-risk investment is more suitable and works better for sophisticated investors. It is also a good option for particular investors who need help in stabilizing their portfolio over a long period of time.
If you are in the market for annuity, remember to take caution as annuities are complex financial instruments containing lots of provisions built into the contract which will require you to have a thorough understanding.
Annuity contracts are formed by means of an insurance company. They are taking your investment principal from you and in return, they are giving you a stated rate of guaranteed return which can either be a fixed annuity or variable annuity.
Certificate of Deposits (CDs)
CDs are among the safest investment a person can make. Interest rate is established early and you can be certain that you will regain what you put in, including interest once the original CD grows. Upon maturity of the CD, the full amount of your principal, plus the interest earned can be obtained.
However, there is a catch. Savings account allows you to deposit and withdraw funds without restraints, but for CDs, it is not like that. With CDs, you agree to leave your money in the bank for a specific number of months or years. It is a time deposit preventing you from pulling your funds out without paying a fine.
Term lengths can be as short as a few days or as long as a decade but the usual range option is between three months and five years. The longer the term length, the longer your money is kept in the bank hence, raising the interest rate you will get.
If you are looking for income, they are a number options to choose from that can provide high returns with less risks. Keep in mind that a risk-free investment does not exist. Various investments have different types of risk.
If you are worried about the movement of the stock market, but still want to get income in a more secured way, then give these low-risk investments a try.
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