In This Issue

Playing it safe with your dollars and cents

4 low-risk ways to invest

 

November 18, 2011

Carbon watch No matter how old you are, it’s never too early to think about your financial future.

Scared of the stock market? We understand – it hasn’t exactly left us feeling warm and fuzzy, either.  Fear not - there are ways to invest in your future that don’t feel like the roller coaster at your local amusement park.

While no investment is 100 percent safe, some are safer than others.  Beware, though – safety usually comes with a lower return. Before developing an investment plan, know how risky you want to be and what you hope to get out of the investment.

Here are a few investments considered to be on the safer side:

1. Bank savings accounts

Savings accounts are a conservative investment with generally fixed rates, so its returns are relatively small.  The good news is that your initial investment, or principal, is safe. You will always get back what you put in.

Unfortunately, savings accounts don’t include tax deferral, nor can you name a beneficiary if something happens to you.

2. Certificates of Deposit

Certificates of Deposit, or CDs as they’re better known, are another safe investment.  Similar to bank savings accounts, CDs also generally have a fixed rate and currently do not pay a very high return. Like savings accounts, your principal is always safe.

There is also no tax deferral for CDs, nor can you name a beneficiary.  Another consideration – if you want to access funds before the CDs maturity date, you lose any interest that may have accumulated.

3. Money market funds    

Money market funds are not as safe as bank savings accounts or CDs, but they are still considered a moderately conservative investment. In return for the higher risk, money market funds usually have a higher return. 

Just be aware that when investing in a money market fund, you run the risk of possibly losing principal.

4. Annuities

Annuities are the only retirement vehicle that offers a guaranteed income stream that you can’t outlive. With fixed-rate annuities, you can save for retirement and minimize the risk of losing wealth due to the stock market’s volatility. 

Annuities are a good investment if you:

  • Accumulate tax-deferred income for retirement
  • Invest with guaranteed interest rates
  • Receive guaranteed income for a fixed period or income for life
  • Want to avoid lengthy legal process and pass wealth directly to loved ones in the event of your death
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