Low Risk Investments for Beginners for Long Term Profits
Looking for the best low risk investments for beginners? Believe it or not, low risk investments are good for long term investments. What is your risk appetite, low risk or high risk? If you are a low risk profile investor and looking for the types of investments fitted for your profile, here’s the basic guidelines and tips to invest your money.It is true that if you invest in high risk types of investments such as stocks and mutual fund equities, you can also get high ROI or return on investments. If you are afraid to lose your investment capital, you can choose to invest your money in bonds, savings, money market funds, CDs and even retail treasury bills.
Make sure you are investing not just to beat inflation, or worst, you can’t even beat the inflation. Example, if an annual inflation rate is 4%, then, just add 3 to 5% as a basis for your investments interest rate. This simply means, if you will invest in a specific vehicle, make sure it will earn 7% to 9% or more. It is not ideal to just invest in low risk types of investments. You should allocate your assets well. Asset allocation simply means how should you distribute your investments. Example, invest 40% your money in stocks, 30% in business, 10% savings and 10% bonds.
Do not invest in low risk investments unless it can help you achieve your financial goal. There are many types of investments that can take you to financial freedom. These simply means you don’t have to take as much as high risk as you can because even low risk investments can earn great profits especially if you invest for long term. Imagine your investments is earning 6% annually within 25 years. You can turn your $1,000 (one thousand dollar) one time investments into $4,600 (four thousands six hundred dollars) after 20 years if your investments is earning at least 8% per year. That’s the power of compound interest.
Low Risk Investments for Beginners
Bond – a type of investment (debt investment) to lend to a corporation or government to continue its business operations. The investors and the government or corporation has an agreement regarding the earned interest rate and the investment horizon.
CDs – simply means certificate of deposits, it will be considered as a time deposit that can be sold by the banks. It is easy to have a CD when you have already a savings account in your chosen banks.
Money Market Fund – is a low risk type of investments, you can invest in money market funds via mutual fund companies or in any banks that offers UITF (unit trust investment trust funds).
For more information about asset allocation, please the following guide;
- Asset Allocation for Investors Age 30
- Asset Allocation for Investors Age 45
If you have any questions or suggestions regarding this low risk investments for beginners for long term profits, please write it in the comment box below. Feel free to browse other investing topics such as how to start investing in stocks. Do not be in a hurry or excited in investing your money, it is wise to get advice from financial experts or any certified financial planner personally.