Safe High-Interest Investment Rates: Do They Still Exist?

Contrary to popular belief, you don’t have to risk it all within your investment portfolio just to generate some reasonable returns. In fact, when you actually take the time to do your homework, you’ll find a number of investments that not only protect your principle but also generate considerable returns over time. So, what are some of these high-interest investments that should be a part of your investment portfolio? Guaranteed Investment Certificates (GICs) and Certificates of Deposit GICs and certificates of deposit have less liquidity than a saving account but offer a much higher rate of return. Typically the money is locked in or invested anywhere from one month to ten years. The best strategy with certificates of deposit involves reinvesting the amount immediately upon maturity into another certificate of deposit. For example, you’ll buy five separate certificates. One is due in a year, the second in two years, the third in three years, the fourth in four and the final one in five. Each year, you renew the certificate for another five years. Money Market Accounts Most money market accounts are Federal Deposit Insurance Corporation (FDIC) insured. This means your money is guaranteed up to $250,000. Some money market accounts pay a higher interest rate for higher deposits. However, most, if not all, offer a considerably higher rate of return when compared to a savings account. Savings Bonds Federal and state savings bonds are excellent investments that offer a guaranteed rate of return for the duration of the investment. They are backed by federal and state governments so you are assured your money is safe. There are two variations of savings bonds. One is the “EE” bonds, which offers a fixed rate of return. The other is the “I” bonds, which are indexed against inflation and can offer an interest rate as high as 3 percent. Treasury Bills and Treasury Bonds Treasury bills are short-term investments that are typically redeemed within a year. Treasury bonds are more long-term with 30 year maturity dates. Treasury bonds allow you to lock in a high interest rate well in advance. In fact, it’s not uncommon for these investments to have interest rates at 4 percent or more. Having one or all of these aforementioned investments is an important part of any investment portfolio. If you are still curious which investments are right for you, work with a professional from a place like Jakob Pek Fund to find the right path for you. The best approach is to combine these safe investments with ones that have the potential for even higher returns. The idea is that a decline in a given year will be offset by having a portion of your portfolio devoted to these safe investments.