Investing can be a dangerous game for those people willing to put their money in high risk situations. Many beginners are weary to begin investing because of the fact that they are unsure how the investments work and feel that the investments may be too high-risk to yield consideration. As many people are investing with savings and money that should be contributed to the future, it is important to learn the risks of each potential investment.
Here are five low risk investments that are considered to be perfect for beginners:
Savings Bonds
Savings bonds can be obtained from the treasury and are one of the lowest risk investments. It is important to remember that if an investment is considered to be low risk, than it often yields a lower rate of return, or interest rate than an investment that would be considered high risk.
Mutual Funds
As mutual funds are a combination of stocks and bonds in which multiple people pool their money together to create a large investment fund, these are relatively low risk and come in a variety of three types. One type of mutual funds consists of stocks and bonds and others are low risk and allow the consumer to lend money to the government, at an interest rate higher than a savings account for a certain period of time.
High Interest Savings Accounts
High-interest savings account can be opened at your local bank or opened through the use of an internet account. These savings accounts are used for customers that want to make a low risk investment while maintaining the access that the consumer has to their money. This savings account can be opened for a low-cost, even free and be obtained easily. Money can be transferred into the account using internet banking, which increases the convenience of these high interest savings accounts.
High interest savings account often come without high monthly fees, but can cost the consumer money if they are used as the principal account. Some high interest savings accounts come with fees as high as $5.00 each time a transaction is made.
Money Market Funds
Money market funds are available for long or short term investments and yield a low interest rate in return for the use of the money by the treasury. These types of funds are low risk and will often yield a rate that is higher than a savings account, which make these types of investments attractive to those that have little experience investing.
Annuities
Annuities are often purchased from an insurance company and can give the consumer a regular monthly income from the investment. One of the most common types of annuities are those which are purchased for retirement, as they are interest bearing and come with very little risk to the investor.
Very useful guidelines for new investor in the stock market, I think the December effect is similar in spirit to the January effect. Stocks that have done well in the January-November period are not sold by investors in December because selling those stocks will result in taxable capital gains. By waiting a few days investors can postpone payment of capital gains taxes by almost one year. It is relatively easy to time the December effect as popularly available indexes can be used for trading.”
Comment by International trucks — February 26, 2009 @ 5:51 am