Top 5 Low-risk Investment Options

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People are becoming more aware of the importance of achieving financial security.

To achieve sufficient money for everyday necessities, long-term goals, and emergencies, you can opt for investments that will help grow and protect your funds.

But investments come with risks that can negatively affect your finances, such as fluctuating market conditions.

For risk-averse investors, here are some investment opportunities that you can start with:

1. Condominiums

One of the safest ways to invest in real estate is by investing in condominiums. One of the advantages is high demand and resale value as long as it’s in a strategic location. Condos are also generally cheaper than traditional houses, and it’s a great way to own a property with fewer maintenance expenses.

When looking for a condo for sale, learn the art of leveraging. It’s about buying your investment without using too much of your own money by borrowing funds. When you leverage wisely, you can buy more properties even if you have limited funds.

Condominiums are also easy to rent out. There’s a high demand for units, especially in the cities, so renting out several units can make you earn a higher income. Also, the current quarantine protocols compel people to limit their time outdoors, increasing the demand for convenient housing.

Here are other benefits of investing in condominiums:

  • You don’t need to worry about maintenance and upkeep, as corporations cover most maintenance problems.
  • The longer you hold your investment, the greater your ROI can be.
  • Condos attract a large market because they feature services and amenities like shopping malls, gyms, swimming pools, and more.
  • You don’t need to pay the total contract price. You just have to pay the down payment, go into bank financing, then start renting out your unit. Your income will now cover your bank amortization, making your property a self-liquidating asset.

2. Time Deposit Accounts

A time deposit account is a good investment strategy for people who want to build and protect their wealth at the same time. It helps prevent impulse spending because your money is in a fixed deposit account. The length of time needed for your account’s maturity will allow you to plan your future purchases.

Here are some benefits of time deposit accounts:

  • It features a higher interest rate than a savings account and is insured by the Philippine Deposit Insurance Corporation (PIDC), making it virtually risk-free.
  • It requires low maintenance as you don’t need to constantly monitor your money. Also, you won’t be considered inactive if there are no activities made in a year compared to other savings accounts.
  • You continue to earn regardless of market conditions as the interest rates are fixed until the account’s maturity.

3. Mutual Funds

This is one of the recommended investment options for beginners as it’s low-risk and convenient. You only need at least PHP 1,000 to 5,000 initial investment, making it more affordable and accessible.

Investing in mutual funds lets you earn through asset appreciation, dividends, and interest. Asset appreciation lets you earn by selling your shares, dividends are your earnings from stocks, and interest lets you earn depending on time and interest rate.

This can be a good source of passive income, which can even be higher than time deposits or savings accounts.

4. Bank products

Banks offer investment products like Unit Investment Trust Funds (UITF) and high-yield savings accounts. UITF is a group of investments funded by different investors, and professional fund managers manage the holdings. Once you set it up, the fund managers take care of it while you just let your money work for you.

High-yield savings accounts are offered by traditional and digital banks that feature faster and higher returns on deposits. Particularly, digital bank accounts are more convenient as you can open an account through their app or website.

5. Cooperatives

Cooperatives are independent organizations that offer products and services that can earn interest. Members can earn dividends that range from 4% to 20% annually depending on financial performance. Some types of cooperatives include:

  • Marketing Cooperative: They usually cater to farmers and provide them with services like promoting and selling products for them. This helps maximize their profits as middlemen between producers and customers are eliminated.
  • Financial Service Cooperative: They provide services such as loans, insurance, and investments with the lowest cost and highest return.
  • Multi-Purpose Cooperative: They usually offer two or more kinds of services to their members. For example, a coop may offer production and lending services to its farmer members.

Knowledge is essential when it comes to investing. To avoid risks, you need to do thorough research so that you can make informed decisions and fully maximize your profits. These low-risk investment opportunities are a good way to start building your wealth while protecting your money’s value.

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