5 Safe Investment Strategies

Are you looking to create an investment portfolio that offers substantial returns and low risk? Follow these tips for safe investment strategies that our financial planners use to get clients maximum returns on their investments.

Compound Earnings

If you want your money to grow significantly, you need to set it up to compound returns. How does it work? You re-invest the interest earned each month to grow your investments exponentially. It’s as easy as starting with a small investment of $1000 with a 10% return. If you were to add in $100 each month and re-invested any interest made, you could be a millionaire in only 44 years.

Add Bonds To Your Portfolio

Bonds are one of the safest investments you can make, which is why all conservative investors should have these in their portfolio. Just consider the crash of 2008, where the stock market lost half its value. Those who held bonds during this time actually gained money that year because, unlike stocks, bonds carry a promise that the principal will be repaid at later maturity date. Although they still fluctuate with the market, they are not as volatile as stocks and provide less risk all around.

Take Advantage of GICs

GICs are another safe option because their prices do not fluctuate with the market. With a GIC, your principal is guaranteed, so if you put in $1000, you’ll get $1000 back at the end of the term. The interest is also fixed and doesn’t fluctuate. So if you buy one with a rate of 1.5%, you can expect to earn 1.5% on your total investment. There’s also a wide range of options available to you from short and long term durations, market-linked GICs, as well as redeemable options that allow you to take out the money at any time.

Use Your TFSA

Many people believe that their TFSA is just a savings account, but they are wrong. You have the same investment options for the RRSP as you do for the TFSA. So you can use it to store GICs, bonds, mutual funds, stocks, ETFs and segregated funds. The difference is that the money you put into your TFSA has already been taxed. This means that once you retire you can withdraw money from your TFSA account tax-free and not have to worry about paying taxes on that money like you would with an RRSP. And unlike regular investing, you don’t have to claim capital gains or losses with a TFSA; there are no withdrawal taxes whatsoever.

Diversify

Putting all your eggs into one basket can result in significant losses during a downshift in the market. That’s why you should diversify your portfolio to include a variety of investment sectors and asset classes in your portfolio. Invest in a variety of stocks, ETFs, bonds, REITS, index funds, across several sectors and durations to minimize risk.  Just remember that the mix should reflect your risk tolerance, and your portfolio should also be rebalanced every year to adjust for any areas that are under-performing or over-performing.

Hire A Professional

Even investment professionals get expert advice. If you’re looking to invest money, talk to one of our financial advisors who will help you select the right investments for your portfolio. The Beacon Group of Assante Financial Management Ltd. can help answer your questions and put you on the right path to financial freedom for your retirement. Contact us today to learn more.