If you’re looking to diversify your investment portfolio but you’re also hesitant about investing a lot of money in this economy, finding some lower-risk investment opportunities may be the best option for you.
To help you in finding the right vehicle for your money, here are three lower-risk investment strategies to consider for your portfolio.
Investing in bonds could be a great choice for you if you’re wanting to invest in various areas while also keeping your risk relatively low.
According to Miranda Marquit, a contributor to U.S. News and World Report, bonds are essentially a loan that you make to a company or enterprise. As that organization holds onto your loan, you’ll make interest off of it as well as getting your money paid back once the loan from your bond has matured. There are quite a few different types of bonds that you can invest in, from treasury bonds to various types of securities, including Residential Mortgage Backed Securities.
If you choose to invest in a bond of one type or another, your money will be very safe with regards to getting you interest and a payout once the bond has matured. However, when you choose to invest in a lower-risk bond like this, you also won’t get a very large return on the money you’ve invested.
A Decent Savings Account
Another way you can invest your money in a safe way is to open up a particular type of savings account.
James Royal, a contributor to Bankrate.com, shares that when you put your money in a high-yield savings account, there is very little if any chance that you will ever lose your money. Especially since most of these types of savings accounts are insured by the government, your money is likely very safe in this type of savings account. And since you’re putting your money in a high-yield account, you’ll be making more interest off of the money you leave sitting there than you would have if you put that money in an account with a lower interest rate.
An Online Certificate Of Deposit
Many people who are risk-averse but still want their money to work for them will invest in CDs, or certificates of deposit.
With a CD, you give your money to a bank that can then use it to fund other people’s loans and give you a piece of the interest that they make off of that loan. While you can get a CD from most banks, Chris Davis, a contributor to NerdWallet.com, advises that you try to open up a CD with an online bank, as they often give the best interest rates and returns for the money you’ve invested.
If you have some money that you want to invest in a safe way, consider using the tips mentioned above to help you find a type of investment that will work for you.