What kind of investments or investment strategy is best for you? If you are new to investing or are a veteran, you could be asking yourself this question at any point during your investment endeavors. This article will talk about some low-risk investment strategies that you can consider for your first-time investments, or to add to your current portfolio.
Peer-to-Peer Lending
Instead of investing in companies and potential future profits, Peer-to-Peer Lending offers another way to invest your money. Peer-to-Peer Lending lets you invest in individual people in the hope of getting a return with interest from that loan. There are many platforms in which you can use to do this. Lending Club is a great platform to use for Peer-to-Peer Lending. Investments can be extremely diversified for investment as little as twenty-five dollars. Peer-to-Peer Lending is a great short-term alternative to investing.
Certificate of Deposit
A Certificate of Deposit is the lowest risk investment possible. A Certificate of Deposit is an investment that guarantees you will earn money no matter how the market fluctuates. A Certificate of Deposit you invest your money for a specific amount of time into withering a bank, credit union or an investment broker. Any FDIC insured financial institution will guarantee you will receive your principal investment back with interest. The interest varies depending on how long you have your money invested and what the investment rates are at the time of investment.
Treasury Inflation Protected Securities (TIPS)
TIPS is a certain type of low-risk investment that gives you two options for growth with your investment. The first option when investing in TIPS is a fixed rate of interest. This fixed rate will allow the investment grow over the same rate for the number of years you have invested it for. The second type of interest is built-in inflation protection. If you opt for A TIPS investment with built-in inflation protection than the percentage of interest will grow with inflation. Say inflation grows at a rate of 2% each year. The longer you keep your money invested in a TIPS investment with an option for built-in inflation protection, the more money you will accumulate over time.
Municipal Bonds
Municipal Bonds are a safe bet when looking for investments. Money that you invest in municipal bonds becomes exempt from Federal taxes and in some states, income tax is exempt as well. The advantage of avoiding federal tax and possible income tax makes Municipal Bonds a more attractive alternative to a riskier investment that may be subject to taxes.