If you’ve started to consider setting aside a nest egg of sorts for the future, chances are you’ve already given some thought to the different ways in which your hard-earned money can be invested wisely. Due to the pace of inflation, the interest rate in a typical savings account just won’t cut it, but many of us can be hesitant to dive straight into the stock market or other forms of investment.
For some, it’s about being risk-averse; we’ve all heard a few cautionary tales about how volatile the stock market can be. Many of us probably still have bad memories of the last recession, and thus lean towards a conservative approach in the market. Others don’t have the necessary resources yet to hurdle the entry-level barrier for specific investment options. And if you’re still working full-time, you might not have the free time to deal with actively managing your portfolio.
Due to these and other factors, there’s a strong argument in favor of the following investments, which are both low-risk and hassle-free but offer sufficient rewards to be worthwhile in the long haul.
Tenancy in common properties
For those who don’t have the funds needed to buy, improve, and sell (or rent out) property, it’s easy to ignore real estate as an investment option for the time being. But tenancy in common (TIC) arrangements allow you to be a co-owner of property which you otherwise couldn’t afford, benefiting from income and appreciation while also being eligible for a 1031 exchange, all at a low entry cost.
If the volatility of the stock market turns you off, acquiring shares of preferred stock might be an excellent alternative for you. Such shares are less volatile and have a lower potential for short-term profits, but in return, yield higher dividends on a more frequent schedule, which is often precisely what a conservative first-time investor is looking for.
Brokered certificates of deposit
You may be familiar with certificates of deposit (CDs) offered by most banks – you get to lock in an amount of money over some time for a high fixed interest rate. Brokered CDs, as the name implies, are issued by banks and sold through brokerage firms, offering even higher interest rates with a longer term of maturity. If you’re prepared to lock in a high interest rate for decades, this hassle-free option could be a perfect choice.
US Treasury securities
Treasury bonds (T-bonds) are among the safest long-term investments you’ll ever find, since they are backed and guaranteed by the US government. There are other forms of Treasury securities as well, such as T-bills and T-notes, which have shorter maturity terms, but offer less fixed interest. Starting early on T-bonds can really help set you up nicely for retirement.
Treasury inflation protected securities (TIPS) are a special form of Treasury bond in that they are indexed to inflation. If events of recent years have given you any doubt about the country’s long-term economic outlook, an inflation-adjusted return may be just the kind of assurance you need to invest your money over the next few decades.
Even if you’re averse to entering the short-term, high-risk, high-reward market, many options give a good return while being suitable to a conservative approach. Find what you’re most comfortable with and assure your financial future with minimal risk and effort.