The Dow Jones Industrial Average (DJIA), a benchmark index for stocks, plunged 23.2% in the first quarter of 2020.
This marked the DJIA worst quarter since the fourth quarter of 1987 and was the worst first quarter ever recorded.
Are you considering investing in the stock market? Or looking for ways to grow your money?
Investing can be risky, especially when you are first starting. Keep reading this guide to discover five safe investment options you can feel good about putting your money into.
1. Money Market Funds
Money Market funds consist of a mix of highly liquid investments, such as:
- Bankers Acceptances
- Certificates of Deposit
- Commercial Paper
- Repurchase Agreements
- And U.S treasuries
These funds are subject to fluctuations due to the market interest invested in them but are incredibly safe in terms of risk.
Since money market funds are considered an investment, they are not insured by the Federal Deposit Insurance Corporation (FDIC). But don’t let that deter you from investing in them, they are still considered high-quality investment options.
Money Market funds give you returns similar to a Certificate of Deposit (CD) with the option of withdrawing money still.
2. High-Yield Savings Account
Though not much of an investment, a high-yield savings account offers guaranteed returns while minimizing your risk to virtually nothing.
The only risk you encounter with high yield savings accounts is inflation. Inflation will reduce purchasing power, but that will happen no matter where your money is parked.
High-yield savings accounts average around 1.5% APY compared to a national savings account average of .07%.
3. Fixed Annuity
A fixed annuity is one of the best fixed-income investments out there. Fixed annuities are one of the safest investments available today.
Not only do they guarantee returns on your principal, but you also collect a fixed amount of interest. Fixed annuities are excellent options when it comes to a long term investment.
The FDIC does not back fixed annuities, but annuity providers are required by law to protect their contracts with cash reserves.
4. Dividend-Paying Equities
With any stock market equity, you are subject to the risk that is associated with the market. Keep in mind with dividend-paying equities, you can offset some of that risk with the dividends that are paid out to you.
Most dividend-paying stocks are regarded as high-quality investments for the typical retail investor. This perception is due to the fact that investors relate companies who pay a dividend with financial strength.
Dividends are a great way to generate compound returns and should be included in any investment plan. According to Hartford Funds, since 1970, 78% of the total return of the S&P 500 are from reinvested dividends.
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5. Mutual Fund
With mutual funds, one single investment gives you exposure to a bundle of investments. These investments could include a combination of stocks, bonds, and short term debt.
Investing in mutual funds have many benefits, including:
- Professional Management
- And Liquidity
Mutual funds do have some risk associated with them since they are invested in stock market activities. The risk is much lower than single investments due to the diversification of the portfolios.
For More Safe Investment Updates
Now that you have a list of safe investment options, it is up to you to take the first steps to grow your money and invest in the future. Investing can provide a way of producing additional income and can help have peace of mind when it comes to retirement.
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