Money Market Mutual Funds
A money market mutual fund is a collection of stocks and/or bonds. It means that a number of people invest in these stocks collectively with each one liable to partial ownership. Technically speaking, money market mutual funds are stocks, therefore subjected to fluctuating value. However, the difference lies in the fact that they rely on market securities, not the equity market, which makes them much more stable and reliable. Moreover, they have the flexibility of generic mutual funds when it comes to liquidation and at the same time, provides the security of money market. Additionally, you might like to take some advice from professional investment advisors.
A bond is a debt security, where the bond issuer has to pay the bond holder a specific amount of interest (coupon), as mentioned in the issuing contract, or the maturity amount after a given period of time. Thereafter, the issuer could invest the borrowed amount for funding long-term investments. Bonds are, by far, one of the least risky investment ventures, which could be undertaken by people who are new to financial investment and expect guaranteed returns for their money at stake. Usually, bonds are issued by central banks, sovereign wealth funds, pension funds, insurance companies, and private banks. However, bonds, like stocks, do have an element of risk. Sometimes, the bond markets could rise and consequently, the stock markets fall. Although, unlike stocks, the bond holder does get back some compensation amount on the event of a company’s bankruptcy, whereas stocks render completely devoid of feasible value. The present market provides a plethora of bonds to choose from, thus one should conduct an extensive research of the current bonds in the market, their interest rates and risk factors. Government bonds could be counted as one the most low risk investment options, because there is a least possible chance for the government to go bankrupt, unlike most other corporations.
Certificate of Deposit
A certificate of deposit is a fixed financial amount deposited in a financial institution in exchange of a fixed amount of interest. However, a greater return could be benefited if that amount is allowed to be stored for a given period of time. CDs are one of the low risk investment ideas which you might like to try, if you have some spare money which you might like to deposit and maybe, forget about it for a certain period of time. On the flipside, CD rates start from USD 5000 and it provides guaranteed returns without any fluctuation in the interest rates. However, there are a couple of clauses associated with CDs which you must know. If you withdraw from a CD before the maturity period, then you might have to face fines and penalties which would subsequently, get deducted from your matured amount.
An annuity, in simple terms, could be a contract which converts a given amount of consolidated money into a chain of intermittent returns. Having said that, it is considered to convert the given amount into a flowing income. Annuities are feasible for personnel who are retired or at the verge of retiring and are planning to chart out some best low risk investments, which promise safe returns. It’s very similar to a personal pension plan. Their distinct feature relies on the fact that they provide protection against the risk of outliving one’s assets by guaranteeing safe returns. Annuities are one of the sensible low risk strategies with the assurance of lifetime returns.
It is said that greater returns could be achieved through greater risks. However, sometimes, such financial risks start working against you rather than working for you. With the advent of various investment options, it is assured that you are tormented on figuring out the right deal. If that is the case, then the aforementioned low risk options could be the right start which you were seeking for.
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