Investing, though an excellent way to generate a considerable amount of passive income, is a risky business. Most earners do not want to risk their hard-earned money on a venture that could possibly go under anytime. However, fear should not keep you from investing money and earning extra income for future use. So, if you are put off by high risk investments like trading stock, you can always consider alternative, low risk investment options. Read ahead to find what these are.
1. Savings Accounts
If you want your money to go up in value as time goes by, put it in a savings account—the safest investment option available to beginners that involves very little to no risk. Almost all savings accounts offered by brick and mortar banks are insured by the government. Meaning, if the bank fails for some reason, your savings will not disappear. The government will fully reimburse it. Many banks also now offer high interest generating savings accounts for the long term. These are perfect to save up and increase your funds for retirement. You will need to commit to a minimum monthly deposit, and refrain from making withdrawals frequently. Don’t keep your money as cash in a vault. Cash easily loses value. Any kind of savings account is better than keeping your money in a safe.
2. Secure Investments with a Financial Firm
After the Great Recession of 2008, caused largely by risky mortgage-backed real estate bonds, many people kept off real estate investing fearing another meltdown. However, some financial firms have come forward to offer stable, consistent and relatively secure high yield funds for real estate investors. These firms claim to offer more diligent monitoring of loans backed by real estate, conservative underwriting principals, and better returns for all your trouble. There will of course be some risk involved, but it will be as minimized as possible. Some firms offer principal protection, similar to what the government offers for savings accounts. If you are going to invest in regular ventures like real estate again, go with firms that offer such safe options to reduce the risk of losing your money as in 2008.
3. Fixed Deposits
Fixed deposits involve very little risk for a significant return. Compared to savings accounts, fixed deposits offer much better returns for a certain amount of money. Fixed deposits can be a good way to up your annual interest return after you have saved up a considerable amount of money. Fixed deposits are very easy to handle. Once you put in all your money into one, you can just sit back and enjoy as it goes up in value. Fixed deposits are an excellent investment option to save for life events like retirement.
4. Government Bonds
Investors who want considerable returns for their money, but at little to no risk, should consider government bonds, one of the safest investment options currently available. You can be assured to cash in on a government bond, or resell it if the economy isn’t doing so great. Buy bonds from stable governments, ones that aren’t likely to be toppled anytime soon, to reduce your risk to nil.
All investments involve some form of inevitable risk. However, the above mentioned incur less risk than most and are great options for all risk-averse investors to consider.