5 Low Risk Investments with Moderate Returns

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5 Low Risk Investments with Moderate Returns
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• A low risk investment is an investment that
  offers a small chance of losing some or all of
  your money. The low or safe risk of losing your
  capital is what that makes these investments
  preferred especially for people who are cautious
  in putting their money on risk line. Apart from
  the loss of a significant amount, some people
  also go for low risks if they are new in the
  investment industry or lacks experience to play
  with financial or cash management. Lets discuss
  some of the low risk investments you can avail in
  the market that provides quite reasonable
  returns.

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1) Savings Accounts

• A savings account in a bank or credit union is
  technically an investment if it earns you
  interest. Even then the returns are likely to be
  quite low in todays low interest rate
  environment. This investment is safe in a sense
  that you will never lose your money. Most savings
  accounts are government-insured up to some
  extent. So it is likely you will be given back
  your complete investment in case the financial
  institution goes bankrupt or falls down.

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2) Deposit Certificates

• These certificates are issued by banks and
  promises to give you a fixed interest rate over a
  specified period. It can argued that certain
  savings account tends to give you a much higher
  return than the certificates of deposit, but
  these high-yielding accounts also require you to
  deposit a much larger principal in the bank. It
  is important to note that if you withdraw funds
  early from a CD, you will lose some amount or
  will not get the complete interest earned.

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3) Money Market Funds

• Money market funds are used as a combination of
  CD, short-term bonds and other low risk
  investments that are grouped together without any
  significant diversification in their nature.
  These are sold by brokerage houses and mutual
  funds companies. Unlike a CD, the liquidity in
  money market funds gives you the leverage of
  withdrawing your funds anytime without a penalty.

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4) Treasury Bills, Notes and Bonds

• The US Treasury issues treasury instruments like
  bonds, notes, bills, etc. all of which are
  marketable securities that can be directly
  purchased and sold through mutual funds. If you
  keep these instruments till they mature, then you
  will not lose any money. However, if you sell
  them before maturity, you could lose some of the
  principal amount since fluctuation of interest
  rates affects the principal value. The security
  of these investments depends on which institution
  issued the debts and whether these instruments
  have a secure line of funds to pay both the
  interest and principal.

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5) Corporate Bonds

• Companies issues these on the scale of high,
  medium or low quality. Low quality also termed as
  junk bonds are high-yielding bonds but also
  present a significant interest rate risk and
  default risk. Interest rate risks are those that
  affect market value of the bond because of
  fluctuation of interest rates. Default risks are
  those when company fails to deliver payments on
  interest and principal. If the company goes
  bankrupt, bondholders are preferred over
  stockholders as they get back their money first.

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A short presentation by Capital Concepts

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