Investing Safely

December 5th, 2011 | Investing, Money, Personal Finance

safemoney You want for your money to work for you and to grow, right? But taking risks makes you feel uneasy? So is there a way for you to invest more safely? Of course there is!

There is a rule that is associated with investing that is ancient, and yet remains unchanged. This rule has guided the strategies for investing for people since commerce began and since money was originally invented. This rule is simple: The bigger that the risk is, the bigger the return. You can easily invest in investments that are safe and secure, but you are not going to grow rich very quickly because your profits will be small and steady instead. You are also, however, not likely to go broke or lose your investment however. Once you have a grasp on this concept and the principles surround it, then the answer to the questions above will rely solely on what rate of return you are going to be expecting from the investments that you make.

So let us phrase this in a different manner: What is the safest way that money can be invested in order to receive the desired return on investment?

You can get a regular savings account from your local bank branch or credit union, and this could be considered to be a method of investment. Many people view savings and investing as two completely different things but the truth is once you understand how risk vs. reward works, you can look at savings accounts as a low-risk low-return type of investment vehicle. There are a number of ways that you can increase the potential return in an investment, even when you are only investing your money in a bank savings account. For example, money market accounts and COD or Certificate of Deposit accounts tend to pay out higher return rates than standard passbook savings accounts.

Another low risk and low return investment is a bond, such as the United States Savings Bonds. There are a number of different types of savings bonds that you can invest in, and they are issued by corporate entities and local governments. The bond is essentially a promise to repay a loan at a certain amount of money and interest. You are basically lending money to the issuer with the promise that they will pay back interest once you get a return on the bond. There is a drawback, however, in that the rate of return is lower for this type of investment than other investment vehicles.

The type of investment that you choose really does not matter, because what matters is what return you are looking for and how safe the investment is. You are going to want to study each and every investment vehicle carefully in order to determine which is best going to meet your needs. There is no right or wrong way to invest as long as you are getting what you want out of the deal. What is the right investment for you may be wrong for someone else, for example.

For any Canadians with newborns reading this, another good investment is RESP. Canada offers these Registered Education Savings Plans to families, allowing them to invest money for a child’s future post-secondary education in a tax-free savings account.

Photo Credits: Daniel Leininger

Originally posted 2009-08-10 05:08:42. Republished by Blog Post Promoter

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