When it comes to investing for the future, there are a lot of options to choose from. But not all investments are created equal. Some are riskier than others and some have the potential to generate larger returns. But what if you’re looking for an investment that is safe and will generate a decent return over the long term?
You can invest in assets such as property or gold, you can save money in a variety of accounts such as a savings account, IRA, 401K or a pension, and you can insure yourself against risks such as illness or unemployment.
The best way to protect & grow your wealth is to diversify your investments and to have a plan for how you will use your wealth to achieve your financial goals.
Here Are 8 Best Long Term Safe Investments To Consider
Always do your own due diligence to make sure any investments you make fall in line with your goals, and risk levels.
High-Yield Savings Accounts
What Is a High-Yield Savings Account?
A high-yield savings account is a type of savings account that typically pays 20 to 25 times the national average of a standard savings account. Traditionally years ago, people have held a savings account at the same bank where they hold their checking account, making transfers between the two easy and quick.
But with the advent of internet-only banks, as well as traditional banks that have opened their doors to customers across the country using online banking, the competition on savings rates has skyrocketed, creating a new category of “high-yield savings accounts.”
Certificates of Deposit
What Is a Certificate of Deposit?
A certificate of deposit is a type of savings account offered by banks and credit unions. Banks offer higher interest rates than standard savings accounts in exchange for you leaving your money with them untouched for a predetermined period of time.
Let’s say, for instance, you have $50,000 cash and would like to buy a car in the next year. The interest rate for your traditional savings account is 0.25%. However, your bank offers a CD rate of 1.25% for a 12-month period.
Knowing that you’re not going to need this money for another year anyway, you park it in a CD so that you can earn more interest than you would by leaving it in your bank account.
Of course, some stipulations come with CDs. Many lenders require minimum deposits of at least a couple hundred dollars. Additionally, you are not meant to touch the money until after the maturity date, which is the date your CD term expires.
Doing so subjects you to an early withdrawal penalty.
Many investors consider gold to be the ultimate safe investment as it is a real asset like real estate. Just remember, Gold can experience similar price swings as stocks and other risky assets over the short term. Research suggests that gold may hold its value over the long term.
What Is a Gold IRA?
A gold IRA is an Individual Retirement Account in which gold or other precious metals are held in custody for the benefit of the IRA account owner. Gold IRAs are permitted by the Internal Revenue Service, and they offer the same tax advantages as traditional IRAs.
Precious metals, including gold, have historically been used as a hedge against inflation and financial turmoil. Over the past decade, gold prices have surged to record levels.
U.S. Treasury Bonds
What are U.S. Treasury Bonds?
U.S. Treasury bonds are a type of debt security issued by the United States federal government and backed by its full faith and credit. They are often referred to as “Treasuries” or “Treasury notes.” Treasury bonds have maturities of 10 to 30 years, making them a long-term investment.
They typically pay interest every six months, and the interest payments are exempt from state and local taxes.
They are issued in denominations of $100, $1,000, $5,000, and $10,000, etc. Treasury bonds are liquid, meaning they can be sold by bondholders before they mature. Or, the bondholder can elect to hang on to the Treasury bond until the bond’s maturity date.
Series I Savings Bonds
What Is a Series I Bond?
A series I bond is a non-marketable, interest-bearing U.S. government savings bond that earns a combined fixed interest rate and variable inflation rate (adjusted semiannually). Series I bonds are meant to give investors a return plus protection on their purchasing power.
Most Series I bonds are issued electronically, but it is possible to purchase paper certificates with a minimum of $50 using your income tax refund, according to Treasury Direct.
Series I bonds give investors a return plus inflation protection on their purchasing power and are considered a low-risk investment. Series I bonds earn a fixed interest rate for the life of the bond and a variable inflation rate that is adjusted each May and November.
These bonds have a 20-year initial maturity with a 10-year extended period for a total of 30 years.2
What are Corporate Bonds?
A bond is a debt obligation, like an IOU. Investors who buy corporate bonds are lending money to the company issuing the bond. In return, the company makes a legal commitment to pay interest on the principal and, in most cases, to return the principal when the bond comes due, or matures.
To understand bonds, it is helpful to compare them with stocks. When you buy a share of common stock, you own equity in the company and will receive any dividends declared and paid by the company.
When you buy a corporate bond, you do not own equity in the company.
You will receive only the interest and principal on the bond, no matter how profitable the company becomes or how high its stock price climbs. But if the company runs into financial difficulties, it still has a legal obligation to make timely payments of interest and principal.
The company has no similar obligation to pay dividends to shareholders. In a bankruptcy, bond investors have priority over shareholders in claims on the company’s assets.
Investing in real estate has become a popular option for many people who are looking to grow their money. Real estate can be a more stable investment than stocks or other options, and it can provide a steady stream of income, all depending on local market conditions.
There are many different ways to invest in real estate, from buying property to investing in real estate crowdfunding platforms.
Real estate can be a great investment, but it is not without its risks. Before you invest in real estate, you should do your homework and understand the market. You also need to have a good understanding of the financial side of things.
What is a preferred stock?
A preferred stock is a share of a company just like a regular (or common) stock, but preferred stocks include some added protections for shareholders. For example, preferred stockholders get priority over common stockholders when it comes to dividend payments.
Preferred stockholders also rank higher in the company’s capital structure (which means they’ll be paid out before common shareholders during a liquidation of assets). Thus, preferred stocks are generally considered less risky than common stocks, but more risky than bonds.
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As people live longer and healthier lives, many are finding themselves in the enviable position of having significant wealth later in life. Whether it’s the result of years of disciplined saving, investing or a lucky inheritance, protecting and growing that wealth becomes a top priority.
Just always remember, there really are no such things as completely risk-free investments. Even the 8 Best Long Term Safe Investments we listed above come with some risks.
The key is to consider your own individual needs and acceptable risk level first, then put together a portfolio that offers you the best long term growth rate for your allowable risk.
If you have any questions or comments, don’t hesitate to post them in the comments section below or just say hello 🙂 I would love to hear from you!
Have a beautiful day, and remember to always be kind and good to others.