Do you want to get highest return? The key is to balance the risk and the return. By the increasing cost for living, investment has become crucial but with the lowest possible risk to get potentially highest returns. In order to approach your investment goals you need to get highest returns on your investment which means the more risk you might have taken to get it. Some of the best low-risk investment options with highest returns are given as follows:
Take some of the tension out of investing by giving a mutual fund, a chance to do a tad bit of the work for you. You can get more benefits by investing in mutual funds than any other bonds and individual stock trading. A mutual fund collects money from hundreds to thousands of investors for creating a portfolio of securities such as bonds, stocks, real estate etc. according to the agreement. This money is then wisely invested by professional stock researchers into various assets and every investor gets a share of return.
These mutual funds (no-load mutual fund) lower your costs as you just have to pay one expense rather than paying commissions for buying and selling securities individually. You don’t have to look after the securities in your mutual fund as it is going to be done by experts on your behalf. There is a lower risk in mutual funds because it invests in diverse resources at a time thus if one does badly the others are there to make up for that risk.
A Roth IRA
A Roth IRA is a retirement saving account where your cash can grow tax free because you have already paid the tax before putting your money into it. Roth IRA is one of the best risk-free options for money investment as it permits your money to grow tax free. Unlike other retirement plans, with Roth IRA you need not to suffer penalties on cash withdrawal before retirement.
A Roth IRA account is funded with after-tax amount that’s why you are free to withdraw your cash at any time. Another major benefit of Roth IRA account is that it allows you to get access to other investment plans like ETFs, mutual funds and bonds thus you can earn a higher return. In this way you can grab highest returns and good profit from your investment when the market is doing really well. Thus it’s a risk free investment plan with higher return.
US Treasury Securities
Investing money in US treasury Securities is a great choice if you are seeking more conventional investment and want to be protected from market ups and downs. US Treasury Department issues the debt contract to fund the national debt. These treasury securities have a definite maturity date and selling security before maturity date cause penalties.
Investment in these securities can be made through the Treasury Direct portal of US Treasury Department. You can easily buy and sell securities through this portal. You can also buy Treasury Inflation Protected Securities (TIPS) from this portal. Investing in TIPS is of great benefit as it not only pays interest but also make regular key conformity to represent rises in the price on the basis of changes in the Consumer Price Index.
Bonds – Municipal and Corporate Bonds
The Municipal bonds are somewhat risky as compared to Treasury Securities and TIPS investments. Interest rate risk is more considerable in this regard. In an environment of low interest rate, the price of the bond drops off to recompense the rise in the rate in market.
For example it will be a great return if you are getting 5% on your municipal bond. But the worth of your bond can be decreased by 7% by the increase in rates and you would be at risk of losing. Only if you sell the bond before maturity, this decrease in the worth of bond will affect you. On the other hand, if you are stick to it until the maturity date, you will get your investment back with the proposed interest. You can also buy a bond, from a broker, that is very near to its maturity date and it’s a good idea for short-term investment for higher returns.
The Corporate bonds are not supported by Federal, local or state government thus they are more risky than municipal bonds. But as we all knows, with great risk comes greater returns, but sticking to maturity date reduces the risk.
Exchange Traded Funds (ETFs)
ETFs are like mutual funds that trade similar to stocks and this feature makes it well accepted predominantly among the active traders which are professional and also individual investors. These ETFs are transparent, economical for trading and more importantly tax-efficient. They attract the active traders interested in trading (buying and selling) intricate monetary products the whole day and also a preferred way for investors who want long-term investment in simple and low cost portfolios.
ETFs can be compared to mutual funds for illustrating its importance. As mutual funds are priced once in a day, so everybody gets the fund at the same price regardless of the time of the day when the purchase was made. Since, as conventional stocks and securities, ETFs can be exchanged intraday. They give a chance to theoretical financial specialists to wager on the course of shorter-term market developments through the trading of a solitary security.
These were some of the best ways to invest money to get highest returns. Whether you want to invest your money for long term or for a short interval, do remember that risk is certain and losses are unavoidable phase of investing.
“The most important quality for an investor is temperament, not intellect.”
– Warren Buffett