Safe Ways To Invest

Unquestionably, the safest place to invest your money is in interest-bearing accounts offered by banks and credit unions. Regular savings accounts, money market accounts and certificates of deposit (CDs) are insured by the FDIC or National Credit Union Authority. Because CDs are time deposits, there is some interest rate risk. If interest rates go up after you purchase a long-term CD, you may find yourself stuck with lower-than-market earnings until the CD matures.

Diversification

One important way to reduce risk is through diversification of your portfolio. If you have investments in several securities, most will do well, even though you may lose money on an occasional bad investment. This is one of the advantages of investing in mutual stock or bond funds. These funds are large, professionally managed portfolios of securities and by their very nature provide a highly diversified investment.

Relatively Safe Stocks

 Investing in any equity security stocks does carry risk and almost always more than for bonds and savings accounts. However, there are low-risk categories of stocks that offer good returns and the chance of equity growth. Preferred stock is a special type of security that has a guaranteed dividend that must be paid before dividends on common stock shares. In addition, preferred shareholders are paid off first in the event the company liquidates. Preferred stocks thus pay good dividends and carry less risk than common stock but usually don't have as much equity growth potential.

Open a money market mutual fund

Open this account to absorb any extra income that you can eventually liquidate for a house payment or other major purchase. Money market mutual funds do not have FDIC insurance, but they invest in cash-like vehicles that carry little risk, such as treasury bills and bonds.

Conduct your own due diligence. 

 Avoid fraud, don’t rely on appearances, fancy offices, nice suits and power lunches. You’re seeing what others want you to see, and it could be a lie. You must conduct your own due diligence into professional service providers and any proposed offshore financial activity.

Don’t rely on secrecy. 

 Dealing with an offshore promoter who claims that he can help hide your money from tax authorities is an invitation to blackmail. The promoter knows that, if you break the law, you’re unlikely to ask a court to help return your assets when they disappear. The law is clear. It says that any U.S. person whether a citizen or resident alien is liable for annual income taxes on income earned anywhere in the world.

 If it’s too good to be true, it probably isn’t true. 

 Believing and consistently applying this saying is the most important precaution of all. Unrealistic profits, barely believable promises or a vague feeling that you’re being “led on” are all indications that whatever deal you’re being “pitched” is best avoided.