21 Dec, 2021
Low Risk High Return Investment – Is It Possible?
Investors have off-lately been scared with market volatility for quite some time now and seeing the uncertainty in the air most of them are actively seeking stability from their portfolio in the years to come. Investors and traders who were quite aggressive with their investments earlier have also started to shift towards simpler, less risky and more long-term ways of investing. Even financial advisors are stressing more and more on the importance of evaluating one’s own financial situation and then assessing their risk appetite.
Experts always advice for investors, beginners and advanced, to have a fair idea about the risk appetite they currently stand on and only then pick investment avenues or financial instruments to earn higher returns, and not the other way around! If you are also one of those investors who has started prioritizing on lower risk exposure and then earning off of it then we have a few tips and ideal picks that will help you get started.
You can keep the following points in mind if you are seriously considering the low risk-high return scenario for investment-
1. No risk – This would be a strategy wherein you safeguard your capital and then figure out how much returns are possible with just that level of risk bearing
2. Little risk- If strategized and planned correctly then it is safe to say that you might end up breaking even or bearing a minor loss in this. Often in an attempt to make more money, investors forget that risk appetite can be a crucial factor.
3. Moderate risk- Most investment avenues fall under this category as the risk level is moderate and that opens up a lot of exposure to earn in the market.
When an investor considers lowering risk exposure he/she must keep in mind that while it is not impossible to earn higher returns and make more money, it might be tricky to earn by a higher margin.
Here are a few of the ideal picks in the low to moderate risk level category that could help you strengthen your portfolio while you aim to make more money:
1. Income Funds
Investors are often asked to consider various types of bond mutual funds and other income funds because they offer diversified investment portfolio and there is immense variety to choose from in this section as well. Exchange Traded Funds (ETFs) are relatively new players in this category
2. Fixed Annuities
For people who seek to plan their retirements conservatively in terms of risk but still want higher yields, Fixed Annuities are one of the best choices. While a diversified investment portfolio is good for the long and short run, fixed annuities are instruments that help you earn higher returns in the long run and benefit in tax in the short run, making it one of the preferred investment options when it comes to creating a retirement fund.
3. Unit Investment Trusts
Unit Investment Trusts are a lot like ETFs. They are generally a packaged group of preselected securities that ensure better returns even at lower risks. If you are aiming to earn higher returns even in a reduced risk capacity then this might be an avenue worth checking out.
4. Brokered CDs
For all the ultra-conservative investors out there, Brokered CDs might be one of the best ways to create a diversified investment portfolio while you aim to earn higher returns. These instruments can be sold by personal bankers and are issued like most other bonds and traded similarly in secondary market.
5. Savings Account
Technically this might not come under the ‘investment’ avenue but it still is a means of earning modest returns on your capital or savings. The rate of interest you can earn with the money you have simply parked in this account is actually with less or almost null risk.
In the hands of the right asset management company or even with the sound advice of expert financial advisors, you might be able to pull this off at ease! Even if lower risk exposure earns you meagre to modest returns, it still assures your invested capital to a high extent and in trouble times like now, even this seems like a blessing!