Five Safer Investment Options

Reviewed: February 19, 2014
By FinanceWeb

The idea of investing your money and enjoying a comfortable return can be exciting and tempting, but you might be afraid of investing your hard-earned cash only to lose it all. Luckily, some opportunities are much less risky than others, and these top investment options can help you make your money grow without having to take too much of a risk.

1. Fixed Annuities

Fixed annuities are a great option for many reasons. You can generally start out with a relatively low investment amount; in fact, you can often get started with only $1,000. However, you can receive a guaranteed return.
With a fixed annuity, you simply make a deal with an insurance company to allow the company to handle your money for you. However, the company will pay you a reasonably high interest rate, and your money is guaranteed. Some annuities start paying out immediately, and others are deferred and do not allow you to get any of your money back for a certain period of time. When you begin receiving your money, you will receive set payments each month, quarter or year. There are different options that you can look into, but annuities are generally a safe bet that can offer a nice return.

2. Savings Accounts, Money Market Accounts and Certificates of Deposit

Savings accounts are some of the most common ways of saving money. With a savings account, you can earn interest on your money as it sits in the bank. Although the interest rate for most savings accounts is not very high, some banks do offer more than others.To make a bit more money, you can look into a money market account. Money market accounts often require a minimum deposit, and they generally have restrictions as to how much money you can withdraw each month. However, they do offer much higher interest rates and are considered to be safe investments.
Lastly, you can look into a Certificate of Deposit. CDs allow you to earn interest off of money that you deposit into a special account at the bank. These accounts allow you to earn a nice interest rate and are some of the safest and most popular investments. If an emergency strikes, you will have access to your money if you need it, but you will have to pay a penalty if you withdraw it before a set period is up.

3. Buy Gold

Buying gold is an old-fashioned way of making and saving money. If you are able to get it for a low price, you can purchase it and save it for when the price of gold goes up or for an emergency cash situation. Investing in gold also allows you to invest in a tangible item that can be used until you are ready to sell it.

4. Exchange-Traded Funds

Instead of investing all of your money into certain stocks, you can buy shares in exchange-traded funds. To lower the risk of this investment, the money is used to purchase various stocks across different companies. Exchange-traded funds allow you to enjoy the benefits of buying stocks while benefiting from reduced risk through diversification.

5. Real Estate

Real estate has been a source of investing for many years now, and this is true for many good reasons. Many pension plans are now increasing their exposure to real estate to balance their risk and take advantage of market upside. When investing in real estate, consider working with an experienced broker to make sure that you make the right purchasing decisions. Also, consider investing in real estate that your family can actually use so that it can offer you several benefits at once. Real estate investment trust funds are also available at different risk/reward levels and some pay a hefty dividend. Although real estate has gained somewhat of a bad rep in recent years, we believe it can provide the prudent investor with the right portfolio diversification and a steady income stream with great inflation protection.