Safe investment online for beginners: find the best choices

Every time a major recession hits investors wonder why they didn’t put more of their assets into safe investment online options. The theme is also in vogue among anyone who is still dipping their feet in the financial market and has no idea of where to start. They are afraid that they’ll bet too much and lose it all, like many stories we’ve heard of and seen. 

Well, there are plenty of ways of investing without the risk of losing it all or with minimum risk. That’s why we’re here to understand what is safe investment online and the best choices for those who want to get started. 

Just mind one small detail: these investments aren’t necessarily cheap, as many of them have a starting cost and fees. If you’re looking for ways to invest with little to no money, check our other article about the subject here. 

Safe investment online means… lose less money

The fear of losing it all runs rampant among anyone who doesn’t understand the financial market very well. That’s why safe investment online became such an important word: it means being able to invest and create a passive income without the risk of uncontrollable circumstances taking your money away. 

Safe investments are a better choice for anyone who wants to work on their long-term goal. The low risk also means slow returns, which can be a good thing if you’re planning for retirement, for example. 

Other investments, such as the stock market, might have the desirable “get rich fast” characteristic, but nothing guarantees your stocks won’t lose most of their value. That’s why they’re considered high risk. Actually, seasoned investors can make it work while putting themselves at as little risk as possible. 

Beginners, on the other hand, are better off getting a hang of things when their entire financial life isn’t at stake.

Are there any safe investment online ideas that bring good profits?

Safe investment online options very rarely come with high short-term returns. It’s a trade investors make: low risk also means a lot of safety measures and less volatility in prices, so interest rates are low and stable. 

But don’t see that as a negative thing for your investment choice! The keyword here is stable: let’s say that you find some funds that earn you 1% interest a month and put US$1000 dollars in it. After 1 month you’ll see an increase of US$10, not a lot right? After a year it’s US$120, which is still not very much, but starting to get better. 

If you manage to diversify your portfolio and manage to get equally safe investments with 1% interest rates your money will grow month by month. After 10 years you’ll be ready to retire without having any major losses. 

It’s a lot different from high risk investments that can earn incredibly high interest rates. While you could become richer overnight, the chances of losing a good chunk of your investment because of market volatility is higher. 

What is the inflation risk in safe investment online?

With a safe investment online you’ll keep receiving profits over time, even if you don’t move your money at all. But there’s another important factor here: something we call inflation risk. Over time, inflation makes the prices for services and products rise, something that can happen at a slow or fast pace from economy to economy. 

This means that safety isn’t the only factor to consider when you decide to invest. Interest rates must compensate for inflation so that you don’t “lose” money, even if the numbers in your account seem higher. In times of escalating inflation such as today, common savings accounts are a terrible idea. 

The best safe investment online ideas for 2022

These investment ideas will help you start your passive income without too much worry! Most of them have safeguards, such as insurance, that make sure you can get your assets back even if the financial institutions themselves go through a crisis. 

Remember that when you choose an investment you must consider your long-term goals. They might sound great on paper, but take your time and go through every option so that you can find the one that best fits you. 

1. High yield savings account as a safe investment online

Our first pick for a safe investment online are high yield savings accounts. They earn you higher interest than any conventional savings accounts, which typically earn about 0,01% a month. Make the math, that is almost nothing when you compare to inflation numbers. 

However, there are a few things you must watch out for when deciding for this investment: 

1. Fees involved with the account; 
2. Minimum starting deposit amount. 

These details can make high yield savings quite expensive to start with in a few banks. That’s why we recommend you do your research comparing as many traditional and online institutions as possible. Online banks tend to offer altogether more advantageous fees and interest rates. Meanwhile, a bank with which you already have a relationship with, such as a loan or credit card, might offer additional benefits. 

2. Certificates of deposit (CDs)

We’ll begin talking about certificates of deposit, also known as CDs with their main difference from the savings accounts mentioned earlier: higher interest rates. You can earn quite a bit more when purchasing CDs, but they make your money unavailable for an agreed upon period of time. 

When you start your research you’ll find some short-term CDs options. Just be aware that the shorter the term, the lower the interest rates. So if you’re willing to leave your money locked up for a few months or even years, this is the option for you. 

Withdrawing the investment early typically involves a punishment fee, which you should check out before closing the deal. 

3. Series I saving bonds

Are you worried about inflation? Then check out your options with Series I saving bonds, a category of investment that adjusts for the period’s inflation. That means you not only get to make a small profit over it, you also don’t lose your purchasing power. 

The downside of Series I bonds is that the rates also suffer adjustments when the inflation falls. The correction happens every six months, so you might want to watch out for your economy’s numbers. 

Another important observation: this is a long-term investment that lasts five years. If you make a withdrawal before the time is up you’ll pay a penalty of the last three months’ interest. 

4. Money market accounts as safe investment online

These are really similar to savings accounts, but with the possibility of spending straight from the account. There is a limit of transactions a month, so you have high liquidity and the possibility of collecting some interest rates as well. 

Most traditional banks offer money market accounts as well as their other services, however they often have lower interest rates than most other investments. Which means they aren’t actually and advantage when compared to other investments. 

Look for online banks to get better rates with this safe investment online. 

5. Gold and silver

These valuable metals are still pretty important ways of investing with almost no risk. But there is a silver lining, pun intended, to this type of asset: in the short-term it suffers drastic price swings that could leave you with similar risk to stocks. 

If you’re thinking of investing in this option you have to think long term-wise. It’s a great way to diversify your portfolio, but you have to watch out for the right time to sell over the years. Leaving all your money on these assets is risky, since they could have a dip in price when you need money the most. 

6. U.S. treasury bonds

These bonds backed by the U.S. government are considered some of the safest investments you could get. The U.S. has a wonderful record of payment for its debts, which means that investors can have a sure return of their cash. 

If you’re more inclined to start with U.S. bonds, choose those that are inflation-protected so that you can get interest correction. These bonds have been suffering with lower and lower interests, so if possible you should consider keeping a varied portfolio with other safe investment online. 

7. Corporate bonds as safe investment online

Since U.S. bonds are losing their value fast you might want to consider corporate bonds. This option offers much better interest rates, so more return for your investment. The only problem is the higher risk presented by them, since some companies might not repay their debt in full. 

Corporate bonds are divided by grades that can range from AAA (the best ones), AA, A and BBB. There are other rates, but they’re all much riskier than the ones mentioned, if you’re just starting stick to these choices. While bonds can be a safe investment online through online brokers, their fees can be a bit prohibitive. A good choice is an option for mutual funds and ETFs.