What investment would carry a low risk, but high rate reward? | All About Money Online

  • It’s hard to say. Cd’s are generally pretty good, however most rates right now are low due to the economy. Roth accounts are good for retirement because they allow you to ear compound interest without paying taxes on the interest until you re-open the account at the retirement age. Government bonds are also low risk, as are the cd’s. What happens is you buy a 1,000$ bond and the government can use that money. You will receive 2,000$ in about 7 to 10 years depending on the bond. There really isn’t a low risk high reward investment. Low risk goes with low reward, as does high risk too high potential reward.

    By the way, moneychimp.com is a great online calculator for all sorts of interest bearing accounts.

    Comment by Zack — October 25, 2010 @ 1:39 am

    • Stully

      A bond. Good fixed rate of return, but value will change (drop) when interest rates finally start to increase late this year or next.

      I would suggest to you that a good way to get return and minimize stock risk would be to invest in a “Large Cap” mutual fund. It will give your the returns, with out the risk of being stick concentrated, or because you lack the skill and time to monitor your investments.

      To help you, get “Investing for Dummies” and sign up for an investment class at your local adult ed school or J.C.. If it knowledge and confidence you lack, that will get you over the hump!


      Comment by SoccerRefToo — October 25, 2010 @ 2:28 am

    • It’s the old wall street question: Go for high risk/reward, or not have much risk involved and stand to make less?

      The challenge is to meet in the middle, and of course still be happy with what you stand to make…..

      What you can do is check out stocks from “emerging markets” Brazil, Russia, India, and China (but watch out because you’ll never know as much about Brazil etc., as much as u will about the us economy) or try momentum investing..

      Now that’s half the equation, these high risk investments in stocks or companies that are growing fast can and will go down faster than they can go up but If you have the discipline to sell at let’s just say, 5% or 10% loss NO MATTER WHAT, you’ll only stand to lose that 5-10% in ANY investment, no matter how much it wants to go down. You can consider it an insurance policy.

      I’ve pulled out of a company FUQI International months ago, and I SWORE was just being discounted or selling at a low price momentarily… and as much as I loved this company I sold @ a 10% loss telling myself IF it’s worth buying back it’ll show signs, but it continued to correct about 50%!!!! I could’ve lost 1/2 of my money but only lost 1/10!

      The company went up something like 386% in nine months, then got sliced in half in a matter of weeks so be careful with these. So you can go as high risk as you want but if you keep a “tight stop”, or a 5-10% “insurance policy” on it, remember you can only lose 10% even if the thing goes alllllll the way to zero my friend….

      Good luck and I hope it helped a bit!

      Comment by JP — October 25, 2010 @ 3:09 am

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      Comment by Rick — October 25, 2010 @ 3:54 am

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