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7 Most Profitable Investments with Low Risk

The economy is always uncertain, making it necessary to consider low-risk investments in the long run and a rainy day. When considering a lower risk investment, you will likely receive a lower return. In exchange, you are guaranteed a rate of return for a certain period of time.

There is nothing wrong with opting for a low-risk investment. It may take a longer time to accumulate the desired funds, but you will be able to save the money you need over some time. Besides, why do you really want to risk your money? There are plenty of profitable investments with low risk, allowing you to achieve a secured rate of return.

For the most profitable investments with low risk, you may be thinking of safe fixed-income investments. However, there is a way to diversify your investments and build a portfolio of different low-risk investments. You don’t always have to stick to one choice.

Safe investments definitely guarantee value, a steady income, and you know that your principal amount is always kept secured. The following are seven of the most profitable investments with low risk:

1. Savings Account

A savings account should be one of the safest investments with virtually no risk. The interest can start at 1% and go up to about 2.5%. The principal funds are always secured, and you can earn a modest interest rate that will grow your savings over time.

There might be some limitations on how often you can withdraw the funds, but it generally is flexible, and you always have access to those funds.

2. Guaranteed Investment Certificate (GICs)

GICs are a popular way of accumulating investments. All you have to do is keep the funds locked for a fixed period of time. The bank guarantees your principal and a set rate of return. In addition to its safety, there are attractive interest rates for GICs. A typical one-year GIC could have a rate of 2.35%, while investing in a five-year GIC option could secure you of a rate up to 2.5%.

Your funds are generally fixed for a period of 30 days to five years, making it difficult to access these funds. If you do plan on accessing the funds or think you may need it for a rainy day, opt for the cashable GICs. This way, you have your funds locked for a shorter period, say 30 to 90 days, and you can access your funds sooner than later.

The only downside to the cashable option is that the interest is lower compared to the non-redeemable GICs.

3. Municipal Bonds

Municipal bonds are one of the most profitable investments with relatively low risk. They usually pay higher than GICs and a savings account. To earn a good amount, you invest and then hold the amount for the full term to earn an attractive interest payment as well as retain the bond value.

Bonds are a little riskier, but in case of a recession, your interest rates do not dramatically change. The state, government or cities usually issue these types of bonds. Municipal bonds pay back the bondholder and can even exempt federal taxes on the interest paid.

4. Registered Retirement Savings Plan (RRSP)

This is a great retirement savings plan that offers many benefits. If you have an RRSP, you can take out a down payment for your first home and also take out money for an education program without having to pay tax on these withdrawals. You can enjoy this benefit as long as it is paid back over a period of time.

Many people opt for these profitable investments, not only because they want to set up a retirement fund, but also because it is a tax-free compounding investment. However, it is not recommended to withdraw from the RRSP unless it is for buying your first home.

5. Tax-Free Savings

The tax-free savings account allows you to save and to withdraw the savings free of tax. However, there is a limit to how much you can contribute to your tax savings account.

It is always good to learn about your deadline, your contribution limit and to start a TFSA account as soon as you can. This investment is suitable for achieving particular financial goals as the interest, dividends or capital gains are all tax-free.

6. Corporate Bonds

Corporate bonds may be low-risk investments, but they are certainly not risk-free. When you invest in a bond of this type, you are basically loaning a sum of money to the company for a certain period of time.

The corporate promises to pay you interest regularly as a predetermined rate. When the bonds reach maturity, you gain back your principal amount and the interest accumulated.

7. Real Estate Crowdfunding

Real Estate Crowdfunding is relatively a new investment option that uses the crowdfunding platform to raise capital. A group of investors make a particular investment towards property for a small investment.

Generally, this type of investment can be seen as high risk, but there is a catch to this investment. Investors can choose the risk levels that is right for them. So, for this investment, you as the investor can choose a lower risk, lower reward debt if you want to avoid the high risk route.

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