What Are the Safest Investments for Beginners?

The correlation between risk and reward is always inverse. The greater the risk, the higher the reward, and vice versa. In reality, no investment vehicle has risk associated with it. Nevertheless, certain investments are categorically considered safer than others are.

What Are the Safest Investments for Beginners?

The correlation between risk and reward is always inverse. The greater the risk, the higher the reward, and vice versa. In reality, no investment vehicle has risk associated with it. Nevertheless, certain investments are categorically considered safer than others are. During times of volatility, these investments usually provide a safe-haven for most investors. They are stable, low-risk, and can help protect your overall cash. Sometimes, they can even incur a modest growth during tough times. In this article, we have compiled a list of several low-risk investments that are safe for beginners.

Here are the Safest Investments for Beginners


They include:
  • Real Estate
  • Bonds
  • Gold
  • Money Market Funds
  • Certificates of Deposit

Real Estate: Real estate is one of the safest investments that any beginner can pour their money into without the risk of losing it all. For starters, real estate offers you a firm control over your investment with the added benefit of attractive profit margins.

The only downside is that investing in realm estate requires a significant amount of money. However, if money is not a problem to you, then it’s a market that might make you large amounts of profit. As long as people need homes and businesses need buildings, real estate will always be profitable.

There are several ways you can go about:

  • Rent out Property: This strategy involves simply renting out your space or business to tenants who need a place to stay or businesses that need a building to conduct their day-to-day activities.
  • Buying and Selling (Flipping): A strategy where investors purchase cheap real estate properties that need a fixing and re-sell them once they are fixed. It is a great way to make a quick profit on real estate properties.
  • House Hacking: A strategy where individuals rent out a portion of their property that they are living in. An outstanding example is renting out an extra room or unit that they are not using via Airbnb.
  • Whole selling: A strategy where individuals find and market properties for sale and then assign the contract to an investor or perform a double close. This strategy is highly profitable.

1. Gold

Gold is an investment that is usually overlooked nowadays, as it’s deemed unnecessary or valuable in today’s economy. However, gold holds real intrinsic value. Therefore, it is a choice investment, especially when everything else is going down.
Gold can be bought as jewelry, as gold coins or as gold bullions that can be stored away in safety deposit boxes or at home. The biggest advantage of gold is that it preserves wealth. Factors cannot affect the value of gold such as inflation. In fact, during such times, the value of gold increases. Therefore, if you are worried about the future and would love to invest in a safe investment, then gold is your best bet. Experts agree that gold could be worth a lot more if another economic meltdown ever happens again.

2. Certificates of Deposit

Certificates of deposit, or CDs, are some of the most popular investments in existence today. They require very little knowledge. Additionally, they are FDIC-insured for up to $250,000, which guarantees that investors can avoid losing their hard-earned money.
The way they work is that they require an investor to deposit a sum of money for a specific amount of time. In return, the investor is paid interest for the entire duration of the time. You only risk losing your money if you take out your money too early.
Unfortunately, as stated earlier, low-risk investments attract low yields. CDs offer low returns. However, you can look for banks that offer competitive rates and simply invest in them.

3. Money Market Funds

These are pools of very low-risk investments that are pooled together to form diversification without risk. They are often sold by mutual fund entities or brokerage firms. They generate interest, which is paid out to investors in form of dividends.
Unlike CDs, money market funds are liquid. This means that an investor can remove his or her funds whenever they want to, without the risk of being penalized. Additionally, they aim to maintain a net asset value of $1. This makes them entirely safe for beginners to invest in without worry of losing their money.

4. Bonds

Bonds are another safe investment for beginner investors. They are debt investments whereby the investor loans money to a corporate entity or government at a fixed or variable rate for a particular period.
The bond price is equal to the amount loaned to the entity. Investors usually receive interest for loaning the money. The interest rates can be either fixed, floating, or payable at maturity.
The reason bonds are considered safe is that if a company goes bankrupt, bondholders often get their cash back before the stockholders. This makes bonds safe investments for beginner investors.

Summary

Safe investments are ideal in helping investors find a balance between risk and reward. For those who are investing for the long-term future, low-risk opportunities present an excellent opportunity. Fortunately, options such as real estate and bonds continue to look promising year after year. Remember, no matter where or who you are, it is never too late to invest.

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