If you want to grow your money and build your wealth, you need to invest it. What if you don’t invest for the long-term? Well, you risk running out of money in retirement and struggling to cover your expenses later in life.
Due – Due
Sadly, many working Americans today don’t invest their money in various factors. For example, a 2019 GOBankingRates survey found that the reason 55% of Americans aren’t investing is that they cannot afford to.
If you’re living paycheck to paycheck, that is a valid reason. In reality, though, if you were able to put $50 a month into an IRA or 401(k) starting at age 25 and get a 7% average annual return, by 45, you would have $171,000.
Additionally, Marcus by Goldman Sachs conducted a survey that found that another barrier to investing is that people find it overwhelming, precisely because;
- Most respondents have difficulty deciding where or how to invest (51%).
- 44% of respondents feel they don’t know enough about investing.
- There is a concern that it takes too long (23%).
What’s more, 48% of Americans believe the market is rigged against individual investors, according to a Bankrate survey.
But, there’s another reason why people steer clear of investing; it’s too risky.
While it’s true that markets fluctuate, there’s always an investment option for every risk tolerance level. Moreover, diversifying your investment portfolio by owning various assets with different performance characteristics over time can mitigate potential losses.
What about financial crises? Sure. There’s always a chance that these will happen. But, consider that between 1929 and 2015, a diversified portfolio of 70% stocks and 30% bonds had an annual return of 9.1% between 1929 and 2015. Even if history isn’t your wheelhouse, I’ll say that were lots of ups and downs throughout that timeframe.
Most importantly, never invest money that you either can’t afford or stomach to lose. For example, a lot of people might be able to ride the volatility on a $500 crypto investment. But, losing $20,000 after investing $100,000 in such a risky investment is nothing to scoff at.
With that in mind, let’s take a look at eight low-risk investments that also have high returns.
1. High-yield savings account.
Since we’re talking about low-risk investments here, we have to get one of the safest options out of the way first; high-yield savings account.
If you’re unaware, a high-yield savings account is a federally insured savings account. They are appealing because these accounts have higher interest rates than the national average. Generally, they earn roughly between 0.40% and 0.50% APY. FYI, the national savings average is 0.06% APY.
Although high-yield savings accounts aren’t all that thrilling, they do provide a substantial …….