Do you want to earn an extra income? Why not invest your money? You can still invest safely and earn high returns if you’re hesitant about the risks.
Investors are always looking for high-return investments with low risks. Investments with high returns can be associated with higher risks and vice versa.
Investors who want to maximize their returns must take on risk. This is a challenge for new investors.
You should consider your investment profile when choosing a product or company. You can create a money-making system that generates a steady income.
Here are some of the safest investments that offer high returns to help you make the right decision.
The 16 best safe investments with high returns
Stocks that are recession-proof
You can find safe investment options that will give you high returns, depending on your risk appetite.
- High Yield Savings Accounts
A high-yield savings account is one of the best investment options. Federal Deposit Insurance Corporation insures up to $250,000. This is as long as your deposit is with an FDIC insured entity.
Savings accounts with high yields are ideal if your goal is to save up for a big purchase or temporarily store the money you have earned through your high income skills.
Savings accounts are not necessarily investments, but you can earn modest interest without risking any of your money.
CIT Bank offers one of the best saving accounts. Most of the bank’s products offer a competitive rate of interest. The bank’s Savings Builder account offers a 0.40% annual percentage yield. Keep in mind that interest rates can change depending on the market conditions.
- Certificates of Deposit
CDs are similar to savings accounts, but offer higher interest rates. Cds are also insured by the FDIC. This means that they are virtually risk-free.
They are often very liquid.
Investors are required to invest their money in a CD for a period of time ranging from ten years to one month. They are penalized if they withdraw the money before the end of the period. The interest rate is higher than the average high yielding savings account to compensate for your loss of easy money access.
- US Savings Bonds
US savings bonds have one of the lowest investment risks. The US treasury issues the securities to fund the government’s operations. Saving bonds have a fixed rate of interest.
They can be divided as follows:
Series EE Bonds. These have a fixed rate of interest for a maximum period of 30 years. Their interest rate is usually set bi-annually, and therefore, you are assured of the amount of interest that the bond can accrue. These are usually long-term investments, and investors are penalized for redeeming them early.
Series 1 Bonds. These earn an interest based on a combination of a fixed rate and inflation rate. The fixed interest rate is usually set after buying the bonds, while the inflation rate is generally adjusted after every six months. These bonds have a five-year maturity period, and investors who withdraw before the maturity period is over are penalized.
Government Bonds. Government bonds represent debt that a government issues as a way to support its spending. Interest comes in a periodic payment over a set period of 1 to 30 years, with which you can have a steady stream of income.
- Money Market Accounts
Money market accounts are closely related to savings accounts and CDs. They often have a better rate than the savings accounts but have more liquidity than CDs.
You might be allowed to write checks or use debit cards with the accounts, providing greater flexibility.
However, you are limited to six transactions a month in a money market account. When you exceed this, you will pay the penalty. Money market accounts are a good investment option for investors with money they might use infrequently or those who need a little flexibility with their savings accounts.
- Municipal Bonds
Municipal bonds are loans issued to local governments by investors. These are usually a good option for better returns with slightly higher risks than savings accounts, CDs, or saving bonds.
There are no chances of the US government defaulting, and there are a few cases of major cities filing for bankruptcy. But like you would guess, it’s extremely rare for a major city to file for bankruptcy, and likewise, cases of municipal bond default are rare.
- Money Market Funds
Money market funds are a kind of mutual fund investing in short-term debt instruments, cash, and cash equivalents. Money market funds or money market mutual funds offer a low level of risk with pay-out in the form of dividends.
Do not confuse money market funds with money market accounts, as these are two different things. Money market funds are sponsored by an investment fund company, while financial institutions offer money market accounts.
Money market funds provide investors with continuous income while protecting their principal investment.
- Annuities
Annuities are simply insurance contracts. You pay a certain amount of money today, and you get a stream of income in the future. That is why annuities are best suited for retirees looking for a guaranteed income for life.
Annuities may be fixed or variable. With a fixed annuity, you will receive a fixed return on your investments, while in a variable annuity, your investment may fluctuate depending on the market. So the value tends to go up or go down.
Since annuities are an insurance product, guaranteed returns still depend on the insurance company’s health where you bought the annuity. Even presented with that risk, many individuals still accept that annuity can bring stability to their portfolios.
- Investing In High Dividend Stocks
Many companies make dividend payouts to their shareholders quarterly, semiannually, or yearly. It’s possible to achieve some good returns by investing in companies that pay high dividends. However, you should ensure that you buy stocks in companies that make consistent dividends payments.
It would help if you considered the dividend yield of the company before making a buying decision. Also, find a big company with a long history of financial stability and low volatility.
- REITs
Real Estate Investment Trusts (REITs) are a good way of spending money in real estate without investing thousands of dollars as a property owner. REITs provide a dividend that is above average and generally offers good returns over time as the value of property increases.
Begin by researching REITs that buy property in an area of interest. When you’ve earned some money, for example, through flipping things for profit, you can use that to start investing in REITs.
The majority of REITs are registered with the SEC and listed on the public exchanges. These are publicly traded REITs. On the other hand, private REITs aren’t registered with the SEC and aren’t listed on a public exchange.
- Real Estate Crowdfunding
With real estate crowdfunding, you pool together money with other investors to invest in properties. When an investor identifies an investment opportunity, they may not have the ability to execute the project.
There are usually three players in crowdfunding real estate. These are the sponsor who plans and looks at the entire investment, the platform where the sponsor seeks investors, and the investors who contribute capital in exchange for a part of the profit.
Becoming an investor in a real estate crowdfunding project can provide some good returns even though it has a substantial element of risk.
- Corporate Bonds
Just like governments, corporations also issue bonds to fund their expansion plans. When you buy a corporate bond, you lend money to the issuing company that, in turn, commits to pay interest on the initial capital plus interest on maturity. Corporate bonds have bigger interest rates than government bonds. They offer investors the ability to invest in different sectors with an option to cash out before maturity.
While this is a relatively safe investment, it also has an element of risk. Compared to treasury bonds, corporate bonds are riskier, as corporations experience bankruptcy more often than governments. However, if you stick to the blue-chip public companies, it’s possible to stay safe.
- Exchange Traded Funds
One of the downsides of the stock market is that it is very volatile, and the possibility of losing your investment is always present. One of the reasons that keep people out of the stock market is that they fear losing their investment.
Fortunately, Exchange Traded Funds offer investors a good diversification option. Exchange-Traded Funds, or ETFs, is a basket of investments that you can buy and sell on an exchange. ETFs are traded similarly in the same way you trade shares of stock. ETFs shares are traded daily in which prices can change depending on the supply and demand and stock market hours.
Unlike mutual funds, ETFs require less minimum investment than mutual funds. So, if you don’t have enough money yet, you can go for ETFs since they provide many different assets and offer a diversified portfolio for investors.
- Peer-To-Peer Lending
Peer-to-peer lending (P2P) is when you have enough cash and lends it to a borrower against a good interest. Individuals choose to borrow money from P2P instead of a traditional bank since it is a more accessible funding source than a conventional financial institution.
P2P lending generally provides high returns for the investors, and it will also diversify your investment portfolio. However, this kind of investment is not secure, especially if the borrower defaults on their loan. It is important to know the different levels of risk associated with the loan, so you know what to expect and how much risk you can take.
- Treasury Inflation-Protected Securities (TIPS)
Treasury Inflation-Protected Securities (TIPS) can be a great hedge against inflation. While they pay lower interest than what the normal treasury bills of the same length pays, the principle increases or decreases in value depending on the prevailing inflation rate.
TIPS can be an excellent option for investors with money they may not need before the bond’s maturity. The FDIC insures any deposits up to a total of $250,000.
- Growth Stock Funds
Growth stock funds invest in a wide range of growth stocks instead of the single growth stock. This ensures that the risk of a single growth stock falling and hurting the whole portfolio is low.
With this investment option, you don’t need to evaluate and choose individual growth stocks. Instead, the fund is managed by expert managers who select particular growth stocks.
Growth stocks are a good choice for diversifying your portfolio. They are highly liquid, and you can put in or remove your money as you wish.
- Rental Housing
One of the best long-term investment strategies is the buying and holding of real estate. It’s especially a good choice for buy-and-hold investors who would like to build wealth before retirement. For example, Grant Cardone’s net worth was mostly built through real estate investing.
Inflation benefits the rental housing market as it increases the value of the asset. In many neighborhoods, homes usually appreciate at 1.5 times the rate of inflation. While the capital of investing in a housing property is high upfront, you will not lose your whole investment since it’s a physical asset. This is why real estate is a high return but lower risk investment.
The only downside of a rental property is that it’s among the least liquid investments. If you would like to recoup your cash, you will need to sell. Luckily, keeping the property is one of the best ways of generating passive income.
Conclusion – Best Safe Investments With High Returns
Here are 16 of the Best Safe Investments With High Returns
Courtesy Freepik
When you’re investing, there is always some risk involved. But to grow your money, you need to take some risks.
Educating yourself manages the risks involved in investing your money. So, do your research when investing in these products, and you will be able to reap the rewards consistently.
The key here is understanding what investments are available to you and which one best matches your risk appetite. Always remember that successful investing is about managing risk and not avoiding it. So tread carefully and enjoy your investment ride.
This post originally appeared on SavoTeur and has been republished with permission.
