While all investments carry an element of risk, some are lower risk than others, making them ideal for first time investors or experienced investors wary of taking a chance with their money in the current harsh economic climate. Investors should always conduct thorough research and seek professional advice before making an investment decision, but here are 5 low risk investments to consider in 2012.
1) Fixed Rate Bonds
Fixed rate bonds are a sound investment option because, if you continue to invest for the whole term, they are guaranteed to pay out your initial investment and often with interest. Search insurance companies and compare the various guaranteed income and growth bonds before making a final decision. The full term for fixed rate products is usually 5 years. There are also guaranteed equity bonds to consider. These will repay your initial investment, but the interest paid will depend on how the stock market performs.
2) Fixed Term Notice Savings Accounts
For savers who don’t want to tie up their money for more than a year could consider a fixed term notice account. Types of savings account include 7 day savings accounts through to 90 day savings accounts. Savings interest will generally be higher the longer you can tie your money up.
3) Deposit Kick Out Plans
With deposit kick out plans your original capital will be returned at maturity as long as the deposit taker does not default. Deposit Plans come under the UK FSCS Scheme which provides protection on the first £85,000 deposited.
4) Deposit Plans
Like fixed rate bonds deposit plans normally have an investment term of 3 to 5 years. Your money is returned and any additional return at the end of the term as long as the deposit taker does not default. Some deposit plans provide your capital back and a return based on retail price inflation therefore ensuring your money keeps its value in real terms.
5) NS&I Premium Bonds
Investors may also want to consider purchasing premium bonds from National Savings and Investments (NS&I), which pay out tax-free prizes. Every month there is the opportunity to win a £1 million jackpot and over a million smaller cash prizes. Naturally, there is a chance you will not win a prize, but your initial investment is covered by the HM Treasury, who back the NS&I. However, investors should be aware that inflation could decrease the overall value of their original investment.
Investors must remember: to conduct research and seek advice before deciding on their investment plan. The 5 listed investment plans are all viable options and should be considered when you choose to start or extend your investment portfolio.
This post was written by a leading savings and investment opportunities provider.
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