No investment is 100% safe from all risk, especially in unsettled volatile markets. The economy sometimes gets unpredictable, and that’s why many investors lose money whenever shaking happens in the ever-volatile stock market. However, there are investment outlets that are more stable and safer compared to others.
Instead of putting your money and faith into risky investments like cryptocurrencies, choose a lower-yielding investment that will secure your hard-earned cash and even produce modest growth in tough times.
If you are looking for safe investments amidst challenging volatile markets, here are the nine safest investments you can make this 2021:
1. Treasury Bills
T-Bills or Treasury Bills are short-term financial investments that are acknowledged as one of the safest investments since the government upholds them. Buying a Treasury Bill means lending money to the government, wherein the government uses the funds to pay ongoing expenses like military equipment and salaries.
When you purchase a T-Bill, you invest with a fixed interest rate and maturity date. It could be from one month to decades when you buy the bond. While you hold your investment, you will receive regular “coupon” payments and get the principle once the bond matures.
You can purchase Treasury Bills through central banks, government auctions, or brokers in the secondary market. Before getting a T-Bill, take into consideration that you will not be able to pull out your money until the maturity date.
Treasury Bills might have low transaction costs and good tax positioning, but they have lower investment returns compared to others. Yet, you could invest extra money to beat low returns.
2. Treasury Bonds
Treasury Bonds, just like T-Bills, are another form of government security. The only difference is that it is a long-term investment that pays quarterly or bi-annually. The U.S. Treasury Bonds particularly is widely regarded as the safest investment on earth because the government has never defaulted on its debt.
If you are not willing to put your funds on hold for a long time, Treasury Bond is not for you. Although you can sell it before they mature, doing so is not ideal because you will probably lose a significant amount for penalties.
3. High Yield Savings Account
A high-yielding savings account is undeniably a gold standard of a safe investment. It gives strong returns without risks, and the money you saved up is insured up to $250,000 by the Federal Deposit Insurance Corporation.
Although returns in a high-yield savings account are not as high as the potential stock market or cryptocurrency returns, they are a very liquid investment. Furthermore, you can access them immediately without the necessity to pay for penalty.
4. Certificate of Deposits (CD)
A certificate of deposit is quite similar to a savings account having a fixed interest rate that is usually more high-priced than a regular savings account. Similar to a regular savings account, the Federal Deposit Insurance Corp protects certificates of deposits.
Historically, a CD is a paper document that shows evidence that your funds were held in banks at a specific rate. At present, the certificate of deposits does not come with a paper document, but funds are still kept at credit unions and banks.
This investment has a fixed duration and date of withdrawal, known as the maturity date, typically about months to years. You can only withdraw your CD funds after the term ends, making it less helpful for emergencies.
5. Fund Annuities
Fund Annuities are mostly acquired by retirees or people who are planning to retire. Investors are able to spend as much as they are capable of and enjoy tax relief accordingly. Financially stable insurance companies issue this type of investment that is approved by appropriate government sectors.
Losing money in fund annuities is barely likely, but it also depends on the company that issues the annuity. Early withdrawal of fund annuity calls for a penalty and surrender charge.
6. Corporate Bonds
Compared to treasuries, corporate bonds are riskier, but if you go for blue-chip public companies, they can still be considered a very safe investment. You will only take a minimal amount of risk when you clutch at lower-rated options and hold them until maturity.
Corporate bonds are debt securities that companies and firms sell. The company accumulates capital it needs, and investors get paid through a variable or fixed interest rate. Upon maturity of the bond, interest payments stop, and the original investment capital is returned.
High-quality corporate bonds are deemed to be relatively conservative and safe according to the investment hierarchy. Most investors who ventured into risky investments like growth stocks get corporate bonds to offset investment and balanced portfolios. Then over time, they acquire more bonds to safeguard earned capital.
7. Real Estate Crowdfunding
Crowdfunding is a manner of raising funds for business and an easy way for investors to access ventures. To reach target investors, it utilizes various social media outlets like Twitter, Facebook, and LinkedIn. Investors coming from all parts of the world are welcome because the physical presence in the project area is not really necessary.
Real estate companies that don’t have enough capital to start a project (e.g., residential homes, offices, or commercial buildings) commences crowdfunding. Investors are given shares based on the amount they invested.
To mitigate losses, invest only in real estate projects that are in a strategic location and can produce consistent cash flow. Most real estate investments are secured, and their value is ascending trend.
8. Buy Stocks
The secret to making money from stocks is by simply remaining in the stock market. The greatest determinant of your success is your time within. Sadly, most investors relentlessly move in and out of the market at the worst probable times. Hence, they often miss significant returns.
Spending more time in the market lets you collect dividends. However, suppose you trade in and out of the market regularly on a daily, weekly, or monthly basis, you can bid goodbye to those precious dividends because you’re likely to miss critical points on the calendar to seize those payouts.
Before buying a stock, do thorough research about the company’s present status, history, and steadiness. To set a seal on the safety of your investment, choose a firmly established and financially sound company.
9. Mutual Funds
A mutual fund is a type of investment where different investors’ money is combined into an investment product. The pooled fund is then used for investing in assets like bonds, stocks, or other securities to achieve investment goals. Mutual funds make it possible for an average investor to diversify a portfolio even without a high budget.
Technically, the investors don’t directly own shares on companies that their mutual fund provider purchases, but they equally share in losses or profits of the total fund holdings. Professional fund managers handle mutual funds.
Identify your goals before investing in a mutual fund. Are you after long-term capital gains? Will the fund be used for your child’s college expenses? Or is it to fund your retirement? Clearly distinguish your goal, consider your risk tolerance, then address your aspired time horizon— how long would you be willing to hold the investment?
A mutual fund is a safe investment where you can make money through shares of company profits. The profit could be cut off as a dividend or reinvested.