There are no completely SAFE investments. All have some element of risk. There are, however, a number of LOW RISK investments available – though people still refer to them as “safe”. Therefore, this article will explain the SAFEST money investments today plus the best HIGH YIELDING safe investments as a bonus.
THE SAFEST MONEY INVESTMENTS:
Below are the safest money investments available today, starting with the very safest investment first:
Let’s start with the good old American dollar. There are several forms of risk associated with hoarding cash. First, is inflation risk. Assuming an inflation rate of 4%, you would lose 4 cents on every dollar if you do nothing with the money. Secondly, someone might find and steal it.
I consider FDIC-insured banking accounts to be in the CASH category. That’s because your money is currently insured by the U.S. Federal Deposit Insurance Corporation up to $250,000 per bank. Included are: Checking & Savings Accounts, Money Market Deposit Accounts and Certificates of Deposit (CD’s).
The interest rates your money will earn in these banking accounts will not rock your world. Therefore, you have inflation risk because what you are earning on your money will typically be less that the rate of inflation.
Checking accounts pay either no or very low rates and charge fees for just about everything; Savings accounts are infamous for their minimal earnings; Money Market Depost accounts pay a little better, but have limited liquidity because they restrict the # of checks and withdrawals you can make; and with CD’s, to earn the best rate, you’ll need to invest a LOT of money and sacrifice access to it for a long time (unless you want to pay a healthy penalty fee).
#2 US GOVERNMENT ISSUED BONDS, NOTES & T-BILLS
These are collectively known as “Treasuries” and are both issued and backed by the United States Government. For that reason, they are considered the safest money investments worldwide. Once again, these investments don’t pay great returns and you’re faced with inflation risk. Also, you cannot access your money until the term of the “Treasury” has expired (unless you are willing to take a significant reduction in the principal invested). The good news is that Treasuries are tax exempt at the state and local levels.
#3 MUNICIPAL BONDS
Affectionately called “Muni’s” , these investments are issued by state and local governments to raise money for things like new schools, highways and other improvements for the benefit of the population.