So you want to invest but not risk losing all the money you've worked so
hard to earn well investing does come with its risks this means that you can
lose money when you invest many investments do come with high risks and
if you're risk averse then these assets are not for you luckily boss in this
video i will share with you 5 low risk investments that can make you rich and
if you're new to the channel then hit the subscribe button below for more life
changing content before i get into the types of
investments that have low risk i want to briefly discuss what risks you face when
investing investment risk is the likelihood that losses will occur
relative to the expected profit from any investment that simply means that
investment risk is the measurement of the uncertainty that exists with each
investment generally investments that have a high risk have the potential to
pay more interest while investments with low risk have the potential to pay
lesser interest some common risks include market risk interest risk
liquidity risk concentration risk and inflation risk amongst many others
market risk is a risk that exists because of events that take place and
affect the entire market for example government policies can affect the
market either positively or negatively when such events happen the value of
your investment can either become higher or lower another type of risk that
exists is the interest rate risk this is the potential for an investment to
change in value because of a change in the interest rate this means that if an
investment has a fixed interest rate and another similar investment has a higher
interest rate the value of the one with the fixed rate may drop because of the
alternative the final type of risk i'll be talking about in this video is
inflation risk when there is inflation money loses value and the purchasing
power of your money reduces that is a hundred dollars before inflation is
worth more than the same amount after the cost of living increases and it's
possible for the value of your investments to fail to keep up with
inflation resulting in portfolio devaluation now you may be wondering
what makes an investment high or low risk and that's a great question in fact
you need to understand the difference between the two to be able to make low
risk investments that can make you rich risk means different things to different
people but when it comes to investing the risk is usually measured as a value
of the potential loss in monetary terms high risk means that there is a high
probability of losses for example investing in a new pharmaceutical
company can be said to be of a high risk the chances of any new drug making it to
the market are very low that means investing in such a company is a high
risk low risk means that the investment is
fairly stable and the probability of losses is minimal an example of such is
government regulated investments such as treasury bills now let's go over five
low-risk investments that can make you rich
investment number one preferred stocks if you're looking for an investment with
low risk that has the potential to make you rich then you should consider
preferred stocks preferred stock is a low risk investment that can be said to
be in between bonds and stocks in terms of risk that is it has more risk than
bonds but lesser risk than stocks and it combines some features of both bonds and
stocks most investors who are interested in
more of the safety of their money would rather choose bonds with a lower
interest rate than stocks however investors who want a higher interest
rate and are willing to take more risks should look into investing in preferred
stocks preferred stocks have more risk than bonds but the risk is lesser than
common stocks and that is why it has some added advantage that bonds do not
have for example preferred stocks pay regular dividends just like bonds but
they usually have a higher payout when a company wants to liquidate its assets
people who invest in bonds are considered first for payout before other
people the next people that will be considered after that will be the
preferred stock investors investors in preferred stock are paid higher interest
rates because the level of risk that they are willing to take is greater than
those who invest in bonds another reason that makes it less risky than common
stock is because it is regulated like most fixed income investments they have
an inverse relationship with the market interest rate and the value may not
increase suddenly like common stock also people who buy the shares of a company
as preferred stock may not have voting rights however some preferred stocks are
convertible into common stocks where you can enjoy the benefit of unlimited
growth and voting rights just like when you invest in common stocks
investment number two utility stocks another low risk investment that can
make you rich are utility stocks utility stock is the share of utility companies
that provides basic utility services like power electricity water and waste
management amongst other things they are an important part of our daily lives and
without them life would be very different for example try to imagine
life without electricity or clean water supply utility companies serve a major
role in our lives and it has made them valuable and allowed them to realize
consistent growth utility stock remains one of the low-risk investments that can
make you rich because there is always a demand for their services people will
always want to have clean water electricity and gas the comfort that
these utility companies offer makes utility stocks ever profitable one of
the reasons why utility stocks are an example of a low risk investment is
because the industry is a highly regulated one what this means is that
cash flow is predictable and the chances of being paid are very high they pay
investors strong dividends because of the huge profits that the utility
companies make another reason why utility stocks can make you rich is that
they serve the basic needs of humans and that means that there will always be a
demand for their services utility companies have built strong networks and
infrastructures and they have continued to expand and develop therefore as the
human population grows the need for their services will continue to increase
during economic hardship investors are always looking for the safest place to
keep their money in order to not run at a loss most companies may not be able to
cope in the face of bad economic situations such as a recession however
utility companies remain safe because people cannot do without them people do
not stop requiring clean water electricity because of a bad economic
situation people tend to have the needs for these basic resources during such a
period therefore there may be a slight reduction in the value for some time but
it will always normalize again before we continue on with the video i just want
to share a quick reminder that right now you can get up to 10 free stocks worth
up to 2 000 each by signing up for moomoo using the link i've left down
below in this video's description it's basically free money so sign up while
you can boss investment number three fixed annuities
fixed annuities are considered a good investment for those who are looking for
low-risk investments that guarantee a constant return fixed annuities offer a
safe way to save money and also guarantees a higher interest rate than
normal bank accounts fixed annuities are like an agreement between an insurance
provider that guarantees a certain fixed interest rate on the contribution of an
individual to the annuity they are simple and straightforward and also
guarantee a predictable source of income some annuities can start paying you
immediately where others may be deferred and such types will usually pay you out
of retirement the good thing about this type of investment is that it has a low
risk and payment can be guaranteed for life or for a number of years depending
on the terms of the contract the first advantage of fixed annuities is that
they are very simple there are no complicated formulas for calculating how
much you're going to earn like some other types of investments the amount
you will receive as income payment is specified clearly in the contract the
rate of the investment is clearly stated in the contract in any changes made or
spelled out in said contract another advantage to fixed annuities is that
they are very predictable because the terms are clearly stated in the contract
and you know what is to be expected moreover you don't even need to know
anything about how the market is performing the interest rate is spelled
out in the contract and the payment is guaranteed because of this a fixed
annuity is a low risk investment and you need not worry about how stocks are
performing before you get paid this is a good investment for retirement because
you can't afford to lose money at that time investment number four certificates
of deposit a certificate of deposit is a type of savings account issued by
commercial banks it is different from a normal savings account because your
access to the money is usually restricted and because of that it has a
higher payout than the conventional savings account the account gains value
over time and it is subjected to certain types of fees when you draw from it
before the agreed time the way a certificate of deposit works is that a
customer deposits a certain amount of money and interest is paid at regular
intervals until the maturity of the investment the customer will receive the
amount they deposited together with the interest that the amount has accrued
investing in certificates of deposit for the short term will offer a decent
return but it is usually more profitable to invest for the long term a
certificate of deposit is a low risk investment because you don't need a deep
understanding of investing to succeed when holding this type of asset the
money you deposit in a certificate of deposit is also insured up to 250 000
and that makes it one of the safest investments available a certificate of
deposit is a low risk investment and it pays you for deciding to forego spending
your money for a particular period if you are watching this video right now
and have a huge sum of money and are looking for a place to invest it with a
low risk then you should consider a certificate of deposit investment number
five mutual funds mutual funds are made up of a pool of money collected from
investors and invested in low-risk investments such as stocks bonds and
other assets the purpose of a mutual fund is to minimize risk by investing
money in securities and also to maximize profit by diversifying the portfolio
professionals allocate the fund to different investments to maximize profit
and reduce losses moreover these professionals monitor the performance of
each investment the advantage is that the professionals can use their
experience to monitor the market and make decisions that will give the fund
the greatest chance of turning a profit a mutual fund combines different classes
of securities to provide a higher payout with lesser risk investors who do not
have much money may not be able to diversify their portfolio but with
mutual funds they can invest in multiple securities at the same time a mutual
fund saves you the time of monitoring the market by yourself and if you are a
new investor looking to make some profits a mutual fund is a great option
for you you don't need to know much about how the market works before you
can invest in it as you can see investors looking for steady income and
growth have several options of low risk investments to choose from no investment
is truly risk free but as you've seen in this video some come with lower risk
than others hey it looks like youtube thinks this next video is the one that
will change your financial life forever give it a watch and let's see if they're
right