Consider These Low Risk Options For Investing
Between FDIC-insured deposit accounts and a few conservative investments, you’ve got options.
When the markets turn volatile, safe investments providing stable returns get their moment in the sun, and for good reason. FDIC-insured deposit accounts and other low-risk investments help investors grow their wealth. At the same time erring towards caution to keep their savings secure. Remember, though: Low risk generally means low return. Which means most make sense when you’re investing for the short term.
If you’re investing for the long term (think more than a year) low-cost equity investments in some index funds and alternative investments such as Coastal Capital’s trust deed (mortgage) fund are often a better choice.
Lowest-risk ways to grow money
The investments below all come with insurance. Which makes their risks practically nonexistent. But their yields are also very low compared with the long-term returns you can get elsewhere. So while they offer stable returns, the returns are just a penny or less on the dollar currently.
- Money Market Accounts – Currently pay 1% or less but come with FDIC insurance guaranteeing the first $250,000
- Online High-Yield Savings Accounts – Currently pay 0.75% or less and are also insured by the Federal Deposit Insurance Corporation
- Certificate of Deposits (CDs)/Treasure Notes, Bills & Bonds – Basically depositing money with a Federally insured account or with the government. These are locked up for a certain period of 6 months or more that pays less than 0.5% currently.
While all the above are insured they pay returns that do not even keep up with the pace of inflation. Which means when you need to spend funds you invested they will actually buy less goods than when you first invested!
Low Risk Ways To Grow Money
Traditionally, low risk investments are backed by hard assets that tend to slightly appreciated over time. Generally they are not subject to wild valuation fluctuations. The time tested asset that the wealthy prefer to invest in is good, old fashioned real estate. It provides the stable returns everyone is seeking. At Coastal Capital this is our preferred vehicle for creating wealth as well, thanks to its consistent returns that are produced month after month will virtually zero risk.
Don’t think that you have to buy rental properties and then deal with tenants and trying to collect rents. There are quite a few ways to invest in real estate directly and indirectly to enjoy above average returns. All without being large swings in value.
- Buy & Hold Rental Property – Rental income provides two great benefits of monthly rents and depreciation for tax purposes. If purchased correctly one should enjoy returns of 10% or more. And then also get the added tax savings which can be significant according to Investopedia. The only issue is a large down payment is needed to start investing
- Real Estate Investment Trusts – These are traded funds that pool investors monies and invest in all types of real estate. The fund charges a fee to manage everything, so it’s almost like buying a stock. Therefore the value of the fund can change quickly depending on the fund’s results. 10.5% annual return can be expected for low risk options. Great option for those with a few thousand dollars to invest
- Trust Deed Investment Funds – Such as Coastal Capital, loan mortgages to property owners and then collect the rents and other profits and distribute to investors monthly or quarterly. To limit risk we suggest sticking with funds that have zero or low leverage and do not lend to borrowers at higher than a 75% loan-to-value ratio. In general returns will be between 12 to 15% annually. Generally need $25,000 or more to start investing.
The stock market has been generating amazing returns for the last few years, however that will not always be the case moving forward. If you’re seeking consistent & reliable returns check out one of the low risk suggestions above.
Coastal Capital delivers these consistent returns for over a decade at 14% or more historically. We welcome the opportunity to partner with you start growing your wealth! Give us a call at 310-280-7223 or click here to learn more.