Once you become aware of investing, it is difficult to stop thinking about what you can do to start. Besides, it is an opportunity to protect yourself against inflation and possibly retire earlier than planned. However, for low-risk or conservative investors, it takes time for their investments to grow. So, starting as early as possible is a crucial first step to watch your money work for itself.
Investment vehicles are options that you can put your money in with the chance for them to grow. It sounds risky, but there are different kinds of investments, each with its own character of success. The “Wolf of Wall Street” kind that you see in movies and on the news is perilous for your hard-earned cash. If you happen to be a low-risk investor, here are some options for you to consider protecting your assets from inflation in the long run:
1. Real Estate
Owning property is almost always a sure-fire way to get your money back and then some. Real estate is a tangible asset that you can hold on to for years while keeping an eye on the growth of its value. As developments surrounding your property, such as a condominium unit for sale, are completed, its value is highly likely to skyrocket.
There is clearly a great demand for housing in urban areas, as 68% of the world population are expected to live in cities by 2050. This results from the availability of more jobs and the promise of a better quality of life. Your investment will be in great demand due to the circumstance that people find themselves in.
Furthermore, condominiums are easy to sell. This means you will have no trouble finding a buyer for your property and better access to liquidity if you need it. You even have the option of keeping the condominium in the same condition that you bought it and, in a few years, the value will still be a lot higher than when you bought it. All it takes is finding the right buyer. Remember: in general, there is a great demand for property.
One of the safest ways to invest and save money is through purchasing funds. There are private and government funds that you can consider. Private bonds are sold by companies, while government funds are sold by their namesake. Either way, when you purchase a bond, the government or the company will pay you back its value with a steady interest over the time indicated in the bond.
Government bonds are considered to be the least risky form of investment. Even though there is a chance of the government defaulting on your bonds, it can always adjust its budget to make sure that you get your money back. An example of this would be raising taxes or making cuts in its spending.
However, bonds are the epitome of “low risk, low return.” Although there could be higher rate bonds, they have a low credit rating. Do not expect a great yield or interest in your investment.
3. Mutual Funds
Putting your eggs in different baskets is the idea behind mutual funds. These are investment vehicles where you have the opportunity to invest in different kinds of stocks and bonds all at once. There is a low-starting amount, so they can be an option even if you do not have a lot saved. How it works is by investing in many stocks. When one fails, another is likely to succeed. This cuts your risk because you have a better chance of breaking even.
Since mutual funds invest in stocks and bonds, you will benefit from the dividends on stocks and the returns on bonds. Although there are different kinds of mutual funds, money market funds offer the least risk. This is due to its high liquidity and a short period of return. Unfortunately, this low-risk investment also results in a low return. They are usually advised as temporary investment vehicles until the investor has enough for other investments or decides to cash out their savings.
The world of investing always involves risk, but looking into these options can minimize your losses until you have the appetite for more aggressive means. Real estate has real promise in terms of returns if you have the time, whereas bonds and mutual funds can promise a small return in a comparatively shorter period. Whichever one you choose, you should know that researching is the very first step in investing. You need to be aware of what happens to your money when you put it in any investment vehicle.