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Safe Investments That Even Donald Trump Owns

 Mike Nesselback

Take a look at safe investment alternatives that even Donald Trump owns.

Investing does not have to be risky.  For instance, Donald Trump has several investments that would be considered safe, which I'm going to discuss below.

BREAKING THE STIGMA

There is a stigma that investing is full of risk.  This stigma comes from people relating investing to purely investments in the stock market, which are risky.  The stigma also comes from media companies; they usually don’t report on safe investments because they are not as exciting as risky investments where people win and lose money every day. However, there are many different ways to invest with nearly no risk, and a large portion of the populous rely on these methods for retirement, emergency fund planning, or creating extra cash flow to buy that new outfit they wanted.  Many of the safer investments do not require you to monitor them either, so it is a great way to build wealth passively and stress free. As well, knowing if you can handle risky or safe investments is extremely important for one’s piece of mind throughout their life. By the end of this blog, you’ll be able to identify multiple safe investment opportunities that can fit your lifestyle and risk level.

RISKY VS SAFE INVESTMENTS

The major difference between risky and safe investments is the potential profit you can make from your investment.  The risk/reward graph is a great representation of how risk and reward works. For example, investing in the stock market can be risky as you can lose your initial investment, but by taking on that extra risk you will hopefully be rewarded higher returns. With safe investments, there is little risk which means the reward will be smaller.

To figure out what investment is right for you, it is best to think how you would act if you lost part of your investment because it dropped in value.  If you invested $10,000 in the stock market expecting a return of 5%, and next week the market drops 2% in one day, what would you do? (This is a reasonable level of volatility to expect in the stock market).  Your $10,000 would now be worth $9,800. To assess what you would do ask yourself these questions:

“How would you feel losing the $200?”

“Would you be in a panic that your investments dropped, and convert them to cash with a loss?”

“Can you afford to lose your initial investment?”

If you would be devastated by losing your initial investment, you should not be investing in risky products, and should be looking for safer alternatives to keep your mind at piece.  Being content about your risk level is a major component of generating wealth sustainably. By constantly worrying about your investments, you may make rash and crazy decisions that can negatively affect your lifestyle.

SAFE INVESTMENT ALTERNATIVES

Now that you know what levels of risk you can take on, here are some safe investment options to look into:

Savings Account: Yes, a savings account is a type of investment.  Savings accounts are known to be the safest place to put your money, because the only way you can lose your money is if the bank disappears, which nearly never happens.  The return you get on a savings account is considered the lowest. Currently in Canada you can get about 0.05% on a regular savings account. To put this in perspective, if you had $10,000 in a savings account, you would get $5 a year.

Certificate Of Deposit (CD): A certificate of deposit gives the holder a certain amount of interest over a given period set by the holder.  Like a savings account, a CD is very safe and you can only lose your money if the bank was to disappear. A CD timeframe can range from thirty days to five years, depending on the person’s preference. The longer the holding date, the more interest one can expect to receive.  If you had $10,000 you did not need to use for one year, you can exchange your money for a CD and receive 1% annually over 1 year. Giving you an extra $100 when you get your initial deposit back.

Bonds: Bonds are like CD’s, where you give someone money for a certain period and they will give you interest for letting them use your money.  The safest bonds can be bought from the government, and riskier bonds can be bought from companies. They are riskier when bought from companies because they have a higher probability of going bankrupt, compared to the government.  When looking into bonds, make sure to only invest in bonds rated A or better to avoid risk. As long as you hold the bond for the full period, there is little risk of you not receiving the face value you thought you would. Right now a bond for Bell Canada that expires next February can be bought with a return of 1.62%.  If you invested $10,000 in these bonds for a year, you would have an extra $162. Bonds are more complex than CD’s or savings account, so make sure to do your own research if you are considering this investment option.

 

The information in my blogs constitutes my own opinions. None of the information contained in the blog constitutes as a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You understand that I am not advising, and will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the information contained in the blog may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. To encourage safety, we recommend you to always consult with a licensed advisor before making any decisions related to information on this blog.