Generally speaking, there are two ways one can invest funds. You can either invest with high risk and high potential profits, or you can invest with low risk but lower profits. There are benefits and drawbacks to both ways, but as an inexperienced investor lacking the knowledge to properly invest in high-risk securities, safer options are recommended.
Luckily, there are many different ways to invest safely, and below you can learn more about some of the most popular.
Before we get started we want to give you a tip. If you’re not sure about how to invest in high-risk securities, we suggest you use the following guide to place most of your funds in safer investments. That will allow you to set aside a smaller part of your funds for other types of investments and even trading with online brokers or with one of the popular trading apps out there.
This way, you get the best of two worlds and before you know it, you might feel comfortable moving more of your funds to securities with high potential pay-offs.
Also, please note that no investment is ever completely safe and that you always run the risk of losing your investment.
The most classic of all safe investments is regular savings account with a bank, preferably the bank you’re already using.
Most banks have a decent interest rate on their savings account, and even though it won’t make you a millionaire overnight, a good savings account can help grow your funds substantially over a few years.
This type of investment is considered entry-level investing and is where most people start their journey.
Money Market Mutual Funds
Using a Money Market Mutual Fund is another safe option for investments. However, unlike a savings account, these funds are operated by expert researchers whose sole goal is to grow their clients’ investments as much as they can.
The funds work by combining several investors’ funds into one investment, making the potential profits higher than what you can expect from a savings account. Just don’t expect high returns in the short-term.
Certificates of Deposits
Certificates of Deposits (CDs) are considered very safe investments, although the potential pay-off is at the very low end of the scale.
The main benefit of using CDs instead of other investments, even saving accounts, is that you can insure your investments. In most cases, you can insure up to $250,000 per person by spreading the CDs out between several banks and accounts.
U.S. Treasury Issued Securities
As an American investor, U.S. Treasury Issued Securities are some of the safest “real investments” you can make. In order to invest in these securities, you open an account directly with the Treasury and then you can invest as little as $25 in most Treasury controlled bonds.
Another great benefit of these securities is that they are exempt from local income taxes, meaning you get to keep more of your profits.
As mentioned earlier, there is no such thing as a completely safe investment and you always run the risk of losing your profits. However, if you like to play it safe and avoid some of the worst risks, the above-mentioned systems are your best bet.
Also, without the right knowledge, investing on your own can be unnecessarily risky, and if you’re not comfortable, we suggest you contact a professional to get some help. Most banks have investment professionals that can help you get started on your path to a better economy.