When we think of investing our money, many of us imagine Wall Street, with millions and millions made and lost each day. For many of us, this thought is frightening and makes the whole investment business feel like gambling. It’s this idea of stress, gambling, and losing big, that puts a lot of people off investing their money. But investment doesn’t need to be risky at all. There are many low-risk investment strategies that can help you make money with your money without putting it all on the line. Obviously, these low-risk strategies don’t tend to make money the way the risky ones do; they are for slower, steadier growth over time.
High-Yield Online Savings Accounts
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A decent savings account should be the first port of call for anyone looking to make some money without the risk factor. If you just use the savings account you get with your current account you’ll likely only get an interest rate of around 0.01%, so the gains on even a huge amount of money will be miniscule. These kinds of savings accounts are also often awkward to interact with, locking money in for a certain period of time or stopping you from accessing it through an ATM.
Instead of this basic savings account, look out for a high-yield online savings account. These accounts offer much higher interest on your money: usually between 1.0% and 1.5% interest. Given that high-yield savings accounts can help you earn over 100x more than a basic savings account, it’s definitely worth looking into. Look for a high-yield savings account with good perks, such as ATM access. Also look out for an account with no minimum deposit amount. This way, you can add in any surplus money on a weekly or monthly basis without having to wait until you have a big enough chunk to meet a minimum deposit amount. This is particularly good for freelancers and anyone with their own business who doesn’t make uniform amounts of money from month to month.
As most high-yield savings accounts can be obtained online, with minimum fuss, the main obstacle is trust. Without being able to go in and talk to an advisor, it can be hard to trust the legitimacy and authenticity of some online savings account providers. And as you’re going to be putting large sums of your hard-earned money, this can be a big problem. For this reason, make sure you do a lot of research on the bank or account provider before you go with them. The point of low-risk investments is to stop you from worrying, as well as stopping you losing big. So if you’re pulling your hair out, then you’ve sort of defeated the whole purpose.
If you have a very regular, reliable income, you may even like to consider a regular savings account, which is one where you are required to deposit a certain amount of money in each month. The interest rates on regular savings accounts can be as big as 5%. Moneysavingexpert.com has a great regular savings account resource here.
Gold Bullion
Image source – London Gold Bullion
People have been investing for gold for a long time. It gets its value from its rarity and almost every civilisation in the world can trace its currency back to gold (or silver in some cases). Gold bullion is a great low-risk investment because of gold’s stability in the market in contrast to most other commodities. Unlike say farming, where a bad crop yield can hurt investment values, gold is non-perishable and rare, so it holds its value better than almost anything else.
In fact, in times of economic or political strife, the value of gold is sometimes known to go up. This is because people trust the value of gold, viewing it as a stable commodity. Around the time of the 2016 Brexit referendum results, the value of gold went up by 22% whilst most other UK stocks and commodities dropped significantly.
Another good thing about gold is that its value is easy to track. Most of the world works off the London Gold Fix – which is also just called the London Fix. It’s the value of gold as determined by the London gold auctions each day. The London Fix is set at 10.30am and 3.00pm each day. For real-time updates on gold’s value each day, have a look at London Gold Bullion, which has a widget on its homepage that tracks the value of gold for you. There are also lots of articles and advice for anyone looking to invest in gold bullion.
Perhaps the best thing about investing in gold bullion is that there is no VAT or stamp duty. So you can invest a large amount of your savings, have a huge chunk of equity to show for it that will likely rise in value at some point, and you haven’t paid HMRC thousands of pounds for the privilege.
Money Market Funds
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Money market funds might be daunting to a new investor, but they’re definitely worth considering if you’re looking for a way to make your money earn for you. Investing in money market funds can be done on a daily basis and they are designed so that they maintain liquidity at all points – meaning you are never tied into them. They are very low-risk and the rate of interest should always be above the LIBOR (London Interbank Offer Rate), which is the rate that banks tend to lend to one another.
Investing in money market funds is a little like investing in stocks, but they are incredibly low-risk (although not entirely without risk either).
As you make more money in money market funds if you have a bigger investment to play with, it is usually expected that investors use around £50,000 and upwards. This is because £50,000 is the minimum threshold to ensure your money is covered by the Financial Services Compensation Scheme (usually just called FSCS). You can find out more about the FSCS on their website.
If you’re new to money market funds, you may like to talk to an investment advisor before you jump in. The process is a little more complicated, but it’s very safe and well worth your time (and money).
Whether you have a few hundred pounds or a huge investment portfolio behind you, it’s always worth looking around for safer investment options – especially when you take last year’s pollical and economic climate into account. I hope this article has given you a few ideas for how to get rich slowly with low-risk investments.