One of the concerns that people have when trying to build wealth for their retirement is how to balance risk with returns – especially if you didn’t start saving until you were nearing retirement, you want to make sure that savings aren’t going to disappear overnight. You should definitely talk to a wealth management and retirement specialist like Keith Springer to make sure that your investments make sense for you. In the meantime, here are some of the safest investments that you can make to balance off risks in a diversified portfolio.
Different Kinds of Assets
There are a number of different kinds of assets that you can include in your portfolio, and some of them are riskier than others. Generally, the riskier the investment, the higher the potential return – or loss. So, having different kinds of assets with different levels of risk is a good idea as you plan for your retirement. An expert can help you determine the ideal combination for you.
In general, riskier investments include stocks, which can help you grow your wealth while cash, bonds and real estate can generate income. Here are some of the safest options out there to think about when you are diversifying:
Bank Accounts – because the returns are so low, it doesn’t always occur to people that just keeping their money in the bank is an investment option. However your money is protected by law in bank account and for this reason bank accounts are a great way to balance riskier investments. Most banks offer different kinds of account, some of which come with higher interest rates. Look for savings accounts or money market accounts.
Certificates of Deposit (CDs) – CS are in effect loans that you make to the bank for a fixed period of time in exchange for a guaranteed return once the CD matures. The longer you are willing to lock in your money, the higher the rate of return you can receive. Look into creating a CD “ladder” by combining longer and short fixed terms. If you renew them as they mature, you have a cascade of CDs which can be renewed at higher interest rates.
Treasury Securities –Treasury Bills, Treasury Notes, and Treasury Bonds are different kinds of treasury securities. These secure investments are similar to CDs because your money is basically loaned to the government for fixed periods of time. The difference is that you buy these securities at the going rate and cash them in for face value when they mature. The longer you are prepared to lock in your money, the higher a return you will receive.
Money Market Funds – these are mutual funds that invest only in short-term safe assets like those in this list. You can buy and sell them at any time, and they are considered to be quite safe. There are risks and interests are not fixed which makes returns difficult to predict.
None of these investments will make you rich – but they are relatively safe ways to protect your wealth as you approach retirement and should be considered a part of any diverse portfolio.
