What Is The Safest Way To Invest Money?

By First Posted: Mar 31, 2010 Wed 5:37 PM Updated: Jan 19, 2015 Mon 12:07 PM
What Is The Safest Way To Invest Money?
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Unless you are completely new to the idea of investing, you probably know that return on an investment is directly proportional to the risk involved. If you are willing to take high risks with your investments, your returns could be large. But if you are unwilling to take the least bit of risk of with your principal amount, it is not going to fetch you much returns. This implies that different people have different expectations from their investments. While some people want their money to work for them (and grow on its own), there are others who wish to do all the work themselves, allowing their money to just sit parked in a bank account. This obviously means that the meaning of "safe" is different for different people. Hence, it is not possible to universally rate investments as safe or unsafe. But here are a few investment options that are considered relatively safe for most people.

Savings Bank Accounts: Many people would argue that a savings bank account is no investment vehicle, it is merely a saving vehicle. But considering that you get a small interest on your savings, you might say that a savings bank account is the safest way to invest.

Fixed Deposits: Fixed deposits with banks are also a safe investment. The rate of return is slightly higher than that for the savings accounts, yet nowhere near as high as what you could earn in the stock market.

Post Office: Post office accounts are still cherished by the aged people. The rate of return is not too bad, the principal amount is secure, and you can opt for receiving the interest in cash every month. It is very suitable for retired people.

Mutual Funds: Mutual funds decrease the risk involved in investing in debt/equity markets by distributing your money around in many stocks. The funds are managed by a team of highly educated, skilled and well paid professionals. You can completely eliminate the risk involved by opting for a debt based fund, which will give you a fixed rate of return and keep your investment safe.

Government Bonds: Unless the country is involved in a war that almost wipes us out, your investments in government securities and bonds is considered quite safe.

Life Insurance could also possibly be on this list. But it is not because the person investing in LI hardly ever reaps the benefits. No matter which investment vehicle you choose, it is very important to read the fine print before committing your hard earned money. Make sure that you know everything about your investments before you agree to sign on the dotted line.

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