Are low risk investments worth it?
After the volatile end to 2018, some cautious investors have been looking for stability in 2019. Even for the stock market aggressive, a diversified investment portfolio with less risky assets is vital to ensure your earnings see growth over time.
What to consider?
The trade-off, of course, is that by reducing risk exposure, investors are likely to see lower returns over the long term. This can be fine if your goal is to preserve capital and maintain a steady stream of interest income. But, if you’re looking for growth, consider investment strategies that match your long-term goals.
Depending on how much you’re willing to risk, there are a few scenarios you can play:
No Risk – You will never lose a penny of your principal.
A Little Risk – It is reasonable to say that you will break even or incur a small loss.
There are, however, two catches: low-risk investments earn only modest or meager returns; and inflation can erode the purchasing power of money hidden in low-risk investments.
Here are the best low-risk investments for July 2019
- savings accounts
- savings bonds
- certificates of deposit
- money market funds
- treasury notes, bills, bonds and TIPS
- corporate bonds
- thares with dividend payment
- preferencial acts
Overview
While not technically an investment, savings accounts offer a modest return on your money.
There are several accounts available with at least 2% yield. And you can get a little more than that if you’re willing to check the price lists and shop around.
A savings account is completely secure in the sense that you will never lose money. Most accounts are government insured up to certain limits, so you will likely be compensated even if the financial institution fails.
Risk: Cash does not lose real value, although inflation can erode its purchasing power and it can be stolen or accidentally destroyed – risks that do not apply to cash in the bank.
Like savings accounts, Brazil savings bonds are not investments, strictly speaking. Rather, they are “savings instruments”.
Stocks that pay dividends are generally perceived as less risky than those that do not.
