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Safe Investment Options To Consider

Safe investment options to consider include savings accounts, certificates of deposit (CDs), bonds, mutual funds and blue chip stocks.Each of these carries a certain amount of risk and has its own limitations.The risk tolerance of the investor will do a lot to determine which of these investments the person is willing to try.

Savings accounts are by far the least risky of all investments.Even if the bank fails, account balances up to $100,000 dollars are insured by the federal government.Savings accounts allow a person to have easy access to his or her money at any time.That type of flexibility is unmatched by any other investment.Unfortunately, investment may be a bit too strong of a word when it comes to savings accounts.The interest rates that they pay are beyond abysmally low even for account values over $10,000.

Certificates of deposit are the next step above savings accounts.CDs are also super safe.There is little worry in losing money even if the bank folds, but they also have low rates of return.The rates may be higher than a savings account, but the investor wants to make sure that he or she shops around to make sure because CDs require that the money be tied up for a certain length of time.The CD maturity time can be as little as 60 days or as long as five years.Penalties are enforced and forfeiture of the accrued interest if the money is withdrawn from the CD before it has matured.

Bonds are relatively safe and can provide a safe harbor for investors when the stock market is tanking.They do carry with them a little more risk, especially when issued by a private company rather than the federal government.The interest rate on bonds may be paid semi-annually, and the bond can be redeemed for face value when it matures.The return isn't as great as with some riskier investments, but bonds are safer than those investments.

Mutual funds are designed to be safer investments than other types of stock market investments.A mutual fund is normally managed by an experienced trader in the stock market who has a certain set of rules for that fund.Depending on the rules, the fund may only invest on certain sectors, or it can limit the investment by products that companies make.Mutual funds may also invest in bonds and other types of investments.Basically, the strong point of mutual funds is the fund manager, its diversity and the number of people who invest together.More money in a fund allows that fund to vary its investments even better.It is through that variance that a fund can achieve a higher pay back.Mutual funds are generally subject to the market, so when the stock market tanks as a whole, the mutual fund is sure to tank.Beyond that, mutual funds are dependent on their managers for success.If a mutual fund manager isn't in his or her game or isn't paying attention, the fund can tank with just a couple bad picks.

Blue chip stocks are also relatively safe investments.The idea of too big to fail is what applies here.Companies that are established and profitable are the target for safe investments over the long run.The problem is that despite what the federal government may want us to believe, no company is too big to fail.Stocks can be risky even in the best of times; it is just that blue chips have become so engrained in American life and the world economy that it is hard to imagine life without them.

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