When you are investing, it is all about making sure that you are balancing risk and reward so you don’t lose out. While having some risky investments is okay, and can be profitable, you also don’t want to spend too much time and money on risky elements as that can potentially lead to issues. Having a few solid investments that add a little stability can help to balance things out and keep your investments working for you.
Bonds are a good source of investments, but in some cases they can actually cost you more than they help. This happens when the rate of inflation is higher than the interest rate on your bond. If this occurs, you can actually lose money and that can be a downer. By using inflation protected bonds, you can avoid this issue by ensuring that your bonds are protected from inflation. The money in these bonds is insured by the government to prevent the negative impact of inflation from hurting your investment.
Gold is another type of investment that tends to be very solid and add security to your portfolio. The price of gold is almost always moving in an upward direction and it can be a great way to continue earning without taking exceptional risk. Investing in gold is usually a good hedge against the dollar. This means that the cost of gold tends to stand up to inflation and keep you in a positive financial place with the money you earn from your investment.
Certificates of Deposit
Another safe investment to add to your portfolio is a CD. This kind of investment generally must stay in the account for a certain amount of time if you want to avoid a penalty. With this kind of investment you receive a particular level of interest depending on the term you sign up for. With this kind of investment you will receive a stable and protected amount of return on your investment when you cash out the CD at the end of the term.
Adding safer investments to your portfolio can be a great way to ensure that you are always earning. However much risk you want to be taking in some areas of your portfolio, it is always good to balance things out. With that in mind you can make sure that you are keeping your portfolio in a great place.
Check out this article on how to keep your business and personal finances separate!