CAREER ADVANCEMENT / JUL. 06, 2014
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4 Low-Risk Investments Millennials Should Make Today

If you’re a millennial then you might be flabbergasted at the suggestion that perhaps you should set aside some of your money and put them into low-risk investments that could help fund your future.

“Investments?” you might yell out in front of your computer screen. “I can’t even save $5, and you want me to start investing? How could one even fathom such a concept? Don’t you know millennials are deeply in debt and barely make ends meet? How dare you!”

Well, perhaps you’re not necessarily saying those words, but millennials often feel that they’re too much in debt that they are unlikely to accumulate the same assets as their parents or grandparents. Due to overwhelming debt levels, stagnant wages and a rising cost of living, millennials are postponing their future and are barely keeping their head above water.

But there is some light at the end of the tunnel. The economy is somewhat improving, the labor market is getting better and millennials are finally beginning to realize how important it is to save, at least according to several different polls from financial institutions and organizations.

If you’re a millennial and you have already launched a savings account then right now would be a perfect time to start considering purchasing investments. Of course, when looking at investment options, one mustn’t think that they have to put their entire life savings into them. It takes baby steps and a person must crawl before they can walk.

A mutual fund, for instance, only requires a $100 minimum commitment and then an automatic savings plan of $25, whether a millennial opts for weekly, monthly, quarterly or annually transactions it’s entirely up to them. Or, a millennial can save up $500 during the year and buy investments all at once.

With that being said, here are five low-risk investment options that millennials should make today:

Mutual Fund

A mutual fund is a professionally managed investment that pools money from investors to acquire securities. In other words, you’re getting access to bonds and stocks without ever actually obtaining a brokerage dealer and purchasing individual stocks.

This is a wise investment for neophytes who don’t want to regularly check the stock market. It also allows investors to have access to international markets, specific sectors or various governments through money markets, balanced growths and global equities. Speak with an investor at your local financial institution to begin buying units today.

GIC

This is an oldie but a goodie for someone who wants to set aside cash for a period of time and receive interest. The Guaranteed Investment Certificate (GIC) is a guaranteed investment that brings a rate of return over a fixed period of time (one, two, five or 10 years). Since it’s very low-risk, the returns are lower than mutual funds or bonds, but they offer the opportunity to dip your foot in the market.

Precious Metals

Precious metals are a safe-haven investment that protects investors from inflation and collapses in the market. Gold, silver, platinum and other metals are hedges and protect your accumulative wealth over time. If they go up in value then the additional bonus is that you’ve gained a profit. You have a few options: you can acquire physical bullion, purchase exchange-traded funds (ETFs) which are paper assets, buy precious metal mutual funds or accumulate junk silver (old coins).

Roth IRA (or Tax-Free Savings Accounts)

United States-based Roth Individual Retirement Agreements (Roth IRAs), Canadian Tax-Free Savings Accounts (TFSAs) and British Individual Savings Accounts are all savings accounts that are not taxed. Although there are limits as to how much a person can contribute (varies by each country), these are safe and provide higher interest rates than standard bank deposits. They also provide tremendous tax advantages considering that you don’t have to declare the interest on your deposits.

Saving and investing is what grows an economy and improves the finances of an individual and a household. Even if you’re up to your neck in debt and obligations it’s still very important to start saving money for a rainy day, unforeseen event or retirement. Starting saving early and regularly can lead to bigger returns down the road.

Are you a millennial who is both saving and investing? Tell us your story in the comment section.

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