Grow Your Wealth With Safe High Return Investments

In uncertain financial times, people want their money to be safe. Stuffing your money in a mattress is not going to get your anywhere. You want your money to grow, but without risk. Well, as we all know risk and return are inseparable. You can’t earn large returns without risk, but there are some high yield safe investments out there (relatively speaking, of course).

The most basic safe investment you can make is with a high yield savings account (my favorite is ING Direct). You can typically open one at most online banks. Most banks will have a no minimum balance option for those just starting. The higher your balance the greater rate of interest the bank will pay you. The advantage of savings accounts is that you can withdraw your money at any time, without penalty. Many people find savings accounts a great place to keep an emergency fund for unexpected events.

The next step up from a savings account is a certificate of deposit, commonly referred to as a CD. A CD differs from a bank account in that it is set for a specific amount of time, and at a specific interest rate. Common lengths of time for CDs are three months, six months, and anywhere between one and five years. Generally, a larger sum will yield a higher interest rate. If you want to withdraw your money before it reaches maturity you will often have to pay a penalty, usually losing some amount of interest. It is better to only have money you think you will not need right away in a CD for this reason.

A bond is a contract between two parties to pay back borrowed money with interest. It is similar to a loan and is a security with a set term that it will mature at. Bonds can be had through different sources like companies, banking institutions, governments, and even bond mutual funds. There are three lengths of bond maturities. Short term ones are between one and five years, medium are six to twelve years, and long term are twelve years or greater. Bonds are like stocks in that they both give you a stake in a company but the owner of a bond is like a creditor, not an owner, which is why they are safe investments.

The best safe investments depend on your financial situation. If you are looking for something in a few years, a three-year CD may be your best choice. If you just had children and want to save up for their college education a long-term bond is probably ideal for your needs. If you think you might need your money, you can never go wrong with a simple savings account.