Safest Investments with Lowest-Risk
Achieving financial security is often part of a broader goal, such as retiring comfortably or saving enough for a home.
For people who want to know their money will be there when they need it, investments with low risk can seem like the answer. The reality is more complicated than that. Safest Investments with low risk are not guaranteed to provide more security than any other investment.
What follows, are some of the safest investments on the market today, according to The Financial Times:
1. High-yield bonds
These high yield bonds are issued by large companies and offer high yields in exchange for a higher level of risk. Although they are not risk-free, they are generally considered the safest investments. These bonds tend to have lower returns if interest rates go up.
The most popular high-yield bond fund is the Pimco Total Return Fund (PTTAX) which has a net asset value of $2.9 billion and has a three-year annualized return of 13.45%. So far this year (as of May 29th) the fund is at 10.13%.
Short for U.S. Treasury securities, Treasuries are considered one of the safest investments because the federal government backs them and issues them at a guaranteed rate. So long as the United States government remains solvent, Treasury bonds should continue to be a safe choice. In 2002, before the Great Recession, investors started dumping Treasuries because of worries about inflation and the federal government's ability to pay off their debts. But they have since rallied and are still considered a very safe place to put your money.
3. Certificates of deposit (CDs)
CDs are insured up to $100,000 by the Federal Deposit Insurance Corporation. Like Treasuries, they have low risk and high return potential as long as inflation is not too high or the federal government cannot make good on its debt obligations.
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4. Money market funds
These mutual funds are preferred by many investors because they are backed by a large financial institution. They have low risk and very low returns compared to stocks, but they do provide enough interest to keep ahead of inflation.
Most people consider gold as the ultimate safe investment because it has an intrinsic value and cannot be manipulated in the same way as fiat currency (paper money that is backed by the government). You can buy gold in bulk at affordable rates. The price of gold has fluctuated wildly in recent years, which means it is not a very stable investment choice. But when markets are volatile, many investors choose to put their money into gold bullion instead of stocks.
Oil and other commodities are viewed as safe investments because they have a fixed supply. When demand goes up, prices can increase, but it is unlikely to go down. However, when the economy is growing slowly or a major company has an unexpected problem, commodities can be hit very hard.
7. Real estate
Mortgage-backed securities like adjustable-rate mortgages (ARMs) are considered safe investment because they are backed by the federal government. These are loans that allow borrowers to pay back their debt in less than what was originally financed.