For some, the ideal money investments are those that involve the least amount of risk possible. Others are willing to take on some risk in order for the chance to get as big as a return possible. “Great money investments” for you might differ from those of other people. It all depends on how much risk you are willing to take on, your current financial situation, age, and how much money you actually have to begin with.
Low risk investments generally result in low returns, which mean these kinds of accounts make sense when you are investing only for the short term and could need access to the money again in another year or two. A high-yield savings account at an online bank is the most obvious choice, but there are a few more that will bring you slightly higher returns, such as buying a Certificate of Deposit and letting your money sit in the bank for 6-months to two years.
Money market accounts are worth considering for low risk great money investments. They are a hybrid of a savings and checking account, which include allowance for a limited number of transactions / debit purchases per month. Also, this type of account, like a CD account, has a higher interest rate than a regular savings account.
Great Money Investments in Bonds
Treasury securities and bonds are also great money investments for those who don’t want to take on much risk. There are various types, ranging from the Treasury Bill, which is the shortest-maturity issue to the Treasury Bond (“Long Bond”) which is for 30-years. You should at least consider the Treasury Note, which has a 10-year maturity.
For mid-level risk there are dividend-paying stocks and EFTs. You can purchase the dividend paying stocks individually or pick a dividend EFT – ideally one that is as diverse and broad as possible. Look for an EFT that specially invests in stocks or equities and not bonds. The dividend yield refers to how much money a company pays out each year in dividends relative to the share price, which is usually inferred by a percentage.
If you want to invest in stocks individually, look at each one’s payout ratio. This will give you an idea of how much its income is being paid out as dividends. While you obviously want it to be over 2%, you don’t want it to be too high, because if a company is paying a large percentage into dividends, it might end up going into debt trying to pay them.
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