Lower rated issues will pay a higher rate in return for a higher risk of default. These stocks can be purchased through an online broker like Ally Invest. Some of the major characteristics of utility stocks include:. Fixed annuities are designed for conservative retirement savers who seek higher yields with safety of principal. These instruments possess several unique features, including:. This type of CD can be an attractive option for ultraconservative investors who cannot afford to lose any of their principal. These instruments have the following features:.
These vehicles have a different set of advantages and disadvantages from the individual offerings listed above:. Investors who seek income have several alternatives to choose from that can offer superior payouts with minimal risk. It is important to understand that there is no such thing as a truly risk-free investment but that different investments carry different types of risk. For more information on income-producing investments, consult your financial advisor. All Rights Reserved. Money Crashers.
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Advertiser Disclosure X Advertiser Disclosure: The credit card offers that appear on this site are from credit card companies from which MoneyCrashers. Mark Cussen. Views In my experience though, three methods that could potentially maximize risk-adjusted returns involve employing proper tax planning, being mindful of fees and allocating assets to achieve effective diversification. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Investing in stocks, mutual funds and index funds involves risk, including loss of principal.
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We suggest that you discuss your specific situation with a qualified tax or financial advisor. With my background in academia and i I write about advanced investing concepts — in everyday language. Real estate investment trusts, commonly known as REITs, are something like mutual funds that invest in real estate.
The funds are typically invested in commercial real estate, including office buildings, retail shopping centers, and large apartment complexes. A REIT can be invested in a single property, or in dozens of various real estate developments. The latter provides diversity, which can include different types of properties, located in various geographic areas. This can be important, because the real estate market may be stronger in one city or state than it is in another.
There are also REITs available that invest in foreign real estate markets. Unlike investing in real estate as a principal, REITs provide a strong measure of liquidity in your investment position.
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That's because large REITs trade on major exchanges, so that you can buy and sell positions when you decide it is appropriate. REITs can be excellent high-return, low-risk investments because they pay dividends and receive special tax treatment. Those dividend yields are commonly higher than what you can get on risk-free investments, and even higher than what is often available on dividend-paying stocks.
Treasury securities, or cash. Those dividends are tax-deductible, enabling the REIT to minimize or even eliminate income taxes, though the dividends are taxable to shareholders. And if you are invested in an equity or hybrid REIT, you can also participate in appreciation of the underlying properties, as well as the dividend income distributed out of net revenues.
REITs also have the advantage that they represent a diversification away from stocks.
That is, the investment performance of REITs is not closely correlated with that of either stocks or bonds. This can make them a superior investment during protracted bear markets in stocks. If you want to invest into real estate direct, but not ready to a landlord, there are tons of new options available to investors now. Sites like Fundrise. Aggregate Bond Index.
The Barclays index is made up of U. In fact, the index has produced positive returns in 33 of its 36 years. The index includes Treasury bonds, government agency bonds, mortgage-backed bonds, corporate bonds, and a few foreign bonds traded in the United States.
8 Strategies That Offer High Return With Low Risk
The index is not only broadly diversified by type, but by maturity and duration. Duration is a fancy word estimating how much your bond values may decrease if interest rates rise.
Lower is less risk. David Wilson financial planner and owner of FinancialTruths. The index which dates back to has lost money in only three years. Of those negative years, the worst was when it lost only Now let's look at a couple of financial arrangements that are not investments in the strict sense, but can have the same net effect. If you are a frequent credit card user, you can use that spending pattern to your advantage. You have to spend money in order to live, so you may as well make some money in the process. Credit card rewards provide you with an opportunity to make money doing what you would be doing otherwise.
Credit card rewards are only positive if you're the type of credit card user who pays off your balance in full each month. The basic idea is to use credit cards the same way you would a checking account or debit card — by keeping spending and funding in balance at all times. And speaking of high interest rates, here is a guaranteed way to earn a double-digit return on your money, completely risk-free.
If you normally keep balances outstanding on your credit cards, you are almost certainly paying a double-digit interest rate for the privilege. By paying your credit card balances off in full, those interest charges will go away. Think about it this way.