{"id":7153,"date":"2013-11-13T06:41:48","date_gmt":"2013-11-13T14:41:48","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=7153"},"modified":"2016-12-21T07:28:19","modified_gmt":"2016-12-21T15:28:19","slug":"safe-investments-with-high-returns-demystified","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/safe-investments-with-high-returns-demystified\/","title":{"rendered":"Safe Investments With High Returns Demystified"},"content":{"rendered":"

You don’t have to flip through many channels on cable TV or click on more than a few Internet pages to find ads touting\u00a0safe investments<\/a>\u00a0with high returns.<\/p>\n

It’s investment nirvana, really. The idea that you can get a high return on your money while taking limited or no risk is the siren song of many a late-night TV huckster.<\/p>\n

If you want truly safe investments with high returns the first, crucial step is to define both “safe” and “high.”<\/p>\n

\"safe<\/p>\n

Let’s start with safe. For many people, that means never losing a cent. If that’s your goal, well, give up.<\/p>\n

By far the safest investment you could possibly make is buying more education for yourself or starting a business. Even then, you could be jobless and the business could fail.<\/p>\n

But if by “safe” you mean very little risk of loss, then you probably want an FDIC-insured bank account. The returns won’t be great by any means, but your risk of loss is minimal.<\/p>\n

Yes,\u00a0inflation<\/a>\u00a0will eat into your purchasing power, but you won’t lose a cent of your single-owner account holding less than $250,000, the\u00a0FDIC deposit insurance<\/a>\u00a0maximum.<\/p>\n

Moving up a bit from there, the next step is the bond world.<\/p>\n

Government bonds right now are the safest market investment you could make, but the risks remain real enough. For instance, if you buy a long bond now and hold it, inflation could (and likely will) rise in time and overwhelm your potential gain.<\/p>\n

Moreover, once rates rise it will be harder to sell your bond. So, you’ll be locked into a safe but money-losing position.<\/p>\n

What about\u00a0stocks<\/a>? \u00a0Well, here the risks are well known, buts so are the rewards. Many stocks pay a steady dividend. If you manage to pick an undervalued share, then you get the\u00a0dividend income<\/a>\u00a0plus potential appreciation.<\/p>\n

Perhaps less understood is the risk you take in buying a single stock.<\/p>\n

There’s no reason, really, for it to rise in value over time. Dividends can be cut. You might see a blue-chip stock trading at an all-time low and think, “I can’t lose!”<\/p>\n

Then that blue chip goes bankrupt (GM anyone?) or cuts its dividend to zero. Yes, you can lose.<\/p>\n

Many investors recently took a shine to\u00a0gold\u00a0<\/a>on the presumption that the metal was a “safe” alternative to traditional investments. And gold promptly made fools of them all, falling like the proverbial rock as stocks have climbed to new heights.<\/p>\n

Real safe investments with high returns<\/h2>\n

If you seek safe investments with high returns, the answer is to own stocks for their inflation-beating qualities, but not to own single shares.<\/p>\n

Instead, buy\u00a0index funds<\/a>\u00a0that own whole markets, including foreign markets. That way, you get all of those dividends and any appreciation that results at far less risk.<\/p>\n

You also should own some bonds, since they too will pay a return, but own them via\u00a0index funds<\/a>\u00a0as well.<\/p>\n

Finally, own gold. But just enough to counterbalance your holdings in stocks, bonds and real estate. Periodic rebalancing will ensure that you cash out gains in a timely fashion, creating the\u00a0compounding, wealth-building<\/a>\u00a0return you seek while constantly pruning back unnecessary risk.<\/p>\n","protected":false},"excerpt":{"rendered":"

You don’t have to flip through many channels on cable TV or click on more than a few Internet pages to find ads touting\u00a0safe investments\u00a0with high returns. It’s investment nirvana, … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":7154,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[4],"tags":[62,42,43,37],"yoast_head":"\nSafe Investments With High Returns Demystified | MarketRiders<\/title>\n<meta name=\"description\" content=\"If you want truly safe investments with high returns the first, crucial step is to define both "safe" and "high."\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.marketriders.com\/investing\/safe-investments-with-high-returns-demystified\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Safe Investments With High Returns Demystified | MarketRiders\" \/>\n<meta name=\"twitter:description\" content=\"If you want 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