Safe Methods of Investing on the Internet
It is a common knowledge that people need to control their expenses to get ahead financially as well as save some money. It is quite evident that if you stick to the rules, you can have a solid bank balance. However, the question, is what you should do with this money?
If you allow your money to pile up in your bank account, the money might stay safe, and you can take it out when you need it. However, with the present interest rate, it is hardly possible to earn much from it. So, it might make you wonder what to do with the funds. Well, there are several investment methods which can offer good returns yet with low-risk.
Even though this is not an investment in technological terms, it provides a decent return on the money. There are several accounts providing a yield of 2%, and you will be able to get a little more than this if you check the table rates and then shop around.
The reason you invest in a savings account is safety. To a certain limit, your money is government-insured. This means that even if the institution fails, you will be compensated for it.
Cash might not lose dollar value, even if inflation is capable of eroding the purchasing power, and it can be accidentally destroyed or stolen, risks that don’t apply to the money inside the bank.
Another great method to invest and earn high rates of money is to invest in online gaming. In this method, you not only can profit but also have fun. You will just have to open an account in an online game and start playing. There is a large collection of games to choose from, starting from classic slot games to many others. Just choose the game that you would like to play and start winning prizes.
Certificates of Deposit
Bank certificates of deposit are loss-proof until you take out the money earlier than the mentioned time. With certificates of deposits, the bank will pay you a selected rate of interest for a specified time period but for that, and you will have to keep it intact until the end of the mentioned term. There are some saving accounts paying a higher rate of interest than some certificates of deposits, but these high yielding ones usually require a large deposit.
However, keep in mind that if you take out the funds earlier than the term period, you are going to lose the interest that you have earned. At times, the banks might also deduct some amount from the principal. You should read the terms and conditions carefully before investing.
Treasury Bills, Bonds, and Notes
TIPS, Treasury Bills, Treasury Bonds, and Treasury Notes are actually issued by the U.S. Treasury.
- Treasury notes take up to 10 years to mature;
- Treasury bills stretch to just one year;
- Treasury bonds mature after 30 years;
- TIPS are actually securities and its principal value increases or decreases on the basis of whether inflation is going up or down.
You should invest in these as they are marketable securities which you can buy or sell through mutual funds or directly. Also, if you keep the money intact until the maturity time, you are not going to lose any money. The value is going to fluctuate with the rise and fall of the interest rates.
Companies are also known to issues bonds, and these are rated as low, medium, and high quality. The ones which are the lowest are called junk bonds. These might be riskier as apart from the interest rate risk, there is also the default risk.
- Interest Rate-Risk
The bond’s market value fluctuates with a change in the interest rate.
- Default Risk
Failing to make good on the promise made by the company to make the principal and interest payments.
It is a good idea to invest in this as investors will be able to choose the bonds that are going to mature in the following 5 years. Longer are the terms of the bonds, and greater is going to be the rate of interest. For lowering the default risk, you as an investor can opt for high-quality bonds from a reliable large company and purchase funds that are investing in these bonds. Risk bonds are usually lower at risk in comparison to stocks. However, neither of them are risk-free. In fact, experts have to say that bond-holders are higher in the pecking order in comparison to stockholders. Thus, if a company is bankrupt, bondholders are going to get back the money before shareholders get theirs.
Thus, you aren’t limited to one choice. You have various options; just choose the one you think is the best.