With the past twelve months massively overshadowed by global health concerns relating to the COVID-19 pandemic, it can be easy to forget the level of economic damage that the pandemic has also brought along with it. This has meant businesses, investors, as well as the general public are all a bit – or a lot – worse off than they were at this point in 2020.
So, what does that mean for investing your money? Well, naturally in 2021 savvy investors are taking a much more sensible approach to things by favouring lower-risk and longer-term investments. Not sure what we mean by this? Here is a run-through of some of the best low-risk, long-term investments you can make in 2021 to ensure you are still putting money away for your future, without jeopardising your current situation.
Real estate has always been one of the most secure and rewarding areas in which to invest your money – and for good reason too, the market is fairly resolute, rarely crashes all that substantially, and almost always recovers if it does. So, if you are looking for houses for sale to invest in, then buy carefully. What is most important is finding an up and coming area that you can be certain is set for gentrification, new infrastructure, or strong connecting transport link, all of which can or will generate significant value in your property. While real estate is a great area in which to invest your money, the importance of diversifying your investments should not be lost on you. It may be better to put your money into multiple properties to protect yourself from one project failing and not coming off in the way in which you had forecast it to.
Investing in growth stocks does have more of a risk attached to it than that of real estate, so it is down to you how much you are prepared to put in. Nevertheless, a growth stock is by design a long-term investment that can seriously pay off if you cash out at the right time and are patient enough to wait to get there. Growth stocks are for companies in fledgeling industries. Technology is a great example. For instance, had you invested in Apple back in the 90s you could now be looking at a sum more than twenty times that size. If you’re looking to earn consistently through dividends, then this isn’t the investment for you either as most proceeds go towards continued business growth. However, if you land the right growth stock, you could be sitting on a bit of cash cow in years to come.
High Dividend Stocks
If you would prefer a stock that yields a more regular return on your investment, then in complete contrast to growth stocks where you need to be a little more patient, are high dividend stocks. These stocks are best held with companies that you know are most likely to make a substantial NET profit year on year. Take telecoms supplier AT&T for example, it pays out dividends at over 5% in relation to its stock price. Now, you may have a more suitable company in mind that you can put your trust into a little more. However, it is best to stick to the high-profile names when investing in high dividend stocks to minimise your risks and ensure this can be a long-term investment strategy that works, profitably, for you. Capital appreciation makes high dividend stocks even more attractive to investors too!
One of the more fashionable ways to invest your money at the moment is in cryptocurrency. Now, this is a market that fluctuates massively, so you will need to be sensible with your investments if you are going to make this work for you as a low-risk, long-term strategy. That said, there is plenty to be made in this space, with Bitcoin returns over 100% in 2020 alone. Keeping cryptocurrency as risk-free as possible means sticking to certified trading platforms and knowing the market inside out. You will definitely need to put time and effort into this form of investing as to do nothing of the sort could prove calamitous for your finances. There are more than 2,000 cryptocurrencies across the globe right now – that’s an awful lot to get your head around. However, if you find the next Bitcoin, then you could be seriously quids in.
Every sensible long-term investor should consider putting in for a bond fund with a long-term view of retirement. A reasonably low-risk strategy, a bond fund comprises several corporate and government bonds and very rarely falters, with few major value fluctuations. This stable investment solution could be the one for you in 2021, particularly if you don’t keep all that close an eye on the market. A bond fund is a relatively low maintenance investment to make and one of its core benefits is that when your stock and shares aren’t doing so well, your bond fund – or funds – will probably leave you in a position where you’re no worse off. As you well know, it’s important to have a diverse portfolio of investments, and bond funds should very much form part of that.
Certificates Of Deposit
Otherwise known as CDs, a certificate of deposit is a low-risk loan that you make to your bank at a fixed interest rate. Yes, that’s right – you loan the bank your money, rather than the bank loaning you it! Once that loan has expired after whichever length of fixed-term you agree, you will receive your proceeds, and then have the option to go back into another CD or take the money. While the rewards aren’t mindblowing, they are guaranteed, meaning this is an extremely low-risk, albeit long-term strategy, which will suit those of you who aren’t the most daring but not seem all that attractive to well-versed investors who are prepared to make more of a gamble. However, CDs are entirely insured by credit unions, so there is absolutely no chance of losing any money on them.
Ultimately, there are far more ways to invest your money this year than simply what we have suggested – this list is by no means exhaustive. Nevertheless, these routes are the safest to go down given the current financial climate. Keeping your money in the bank isn’t going to earn you an awful lot, so if you are still prepared to put in a little bit of risk, then there remain fortunes to be unearthed.
For many, low-risk, long-term investments are the steady path to retirement that they have been wanting for some time, and that’s okay. If you aren’t comfortable going all guns blazing into an investment deal, then don’t let your desire for wealth get in the way of your level head and sensible decision making.
Whichever path you choose to go down, just remember a few underlying rules. Firstly, remember who you are financially responsible for, and therefore how much risk you can genuinely afford to take without putting those people in jeopardy. Secondly, know that there is no get rich quick scheme available to you no matter which investments you choose to make. Granted, some will pay out sooner than others, but every investment requires patience and care. Finally, diversify your money wisely. It’s unwise to put all of your eggs in one basket and hope things come through for you, as this is rarely the way life – or the world – works.