Are you wasting your time with low risk low return investments? I’m referring to the investments that seem safe, but don’t give you much in return. Their return on investment (ROI) is low, and the risk is low, and you often don’t have much to gain.
For some low risk low return investments, it can take up to 30 years until you get real results. That’s simply not fast enough. Now, which investments are suitable for you greatly depends on your situation. There is no “one-investment-type-fits-all” solution. But I want to give you some pointers on what to watch out for when you invest in low risk low return investments. I also want to give you ideas on what to do and what to know.
Low risk low return investments sometimes work well as long-term saving plans. You use them so you know you have money in about 30 years. But, if you want to get rich, you need more than that. You want to make investments that payout much earlier. Usually, you want to receive the ROI in 5-7 years.
Focusing only on low return investments is indeed a waste of time. Below are some tips on how to stop wasting your time with low risk low investments:
Why You Are Wasting Your Time?
What’s the real problem with low risk low return investments? They are pretty safe, so that’s good, right? While I agree to focus on low risk investments, the low return part is the problem.
See, rich people maintain their wealth by focusing more on high return investments. Yes, they use low return investments as safety measures. But once it’s set they don’t focus on it anymore. The low return investment works passively while thy focus on active investments with high returns. Low return investments alone, are too slow.
Think about this: Many North American people can get to 1 million dollars in savings in their life some day. But this would likely happen much later in life, after they worked for their whole life. So, being successful with money isn’t that much about the sums. It’s more about the speed at which you can make money. You don’t want to be rich by the time you retire. You want to get there sooner. You want to be able to enjoy your youth.
Smart investments are a powerful tool to multiply your money. That’s why all wealthy people keep investing their money in the right things, and get wealthier and wealthier. If you focus on low return investments only, however, you will acquire wealth very slowly. That’s why too many low risk low return investments are wasting your time.
Common Types of Low Return Investments
Now, I’m not saying to avoid these types of investments completely. There might be times where such an investment makes perfect sense for you. That’s why I’m very careful with listing out actual investment types. But, for the sake that you will understand better what I’m talking about, I will give you some examples of common low risk low return investments.
Certificates of Deposits
Certificates of deposits (CDs) are usually sold by banks and credit unions. They are similar to saving accounts and they are insured. The ROI you will get on a CD depends on the amount of interest that is attached to it. CDs are a low return investment and here is why: they produce bigger returns when the banks can your hold money longer. So, it takes a long time for them to produce cash for you. And the money you invested is in there for years.
Treasure securities are bonds that are issued by the government. There are different kinds and they work a bit differently. The bottom line is that they are relatively risk-free because they are issued by the state. However, you also have to let them run for a minimum of 10 years. For certain kinds, it’s even 30 years.
When you have life insurance, you usually pay premiums annually. So, every year, you put some money into your life insurance. And it’s yours to keep until you are 120 years old. The goal of the life insurance is to get the payout later. The problem with life insurance investment is that quite often the policy expires before you request a payout. Also, you probably have to invest into it for 20 years to get a nice payout later.
If you use low return investments to secure your future in 30 years, then my advice is to keep it very simple. Invest in a low index fund for example. Treat it as your safety net and don’t touch that money. It should be a very passive and boring investment.
Typical Investment Mistakes
Now that you got a bit of a better understanding of what low risk low return investments are, let me share some general investment mistakes people are making. Again, I’m not telling you what to do with your money. But I want to give you these pointers to think about.
Investing in Something You Don’t UnderstandOne of the biggest mistakes people make with their investments, is that they don’t educate themselves on how to properly invest. They don't understand what they're investing in. They hear stories of how other people made good money and… Click To Tweet
Do not invest in something you don’t understand. Don’t buy stocks of a company when you have no understanding of their business model. Don’t invest in bitcoin when you have no idea how it works or what it is. If you are doing such things, you put yourself at risk and potentially lose a lot of money. Be smart about your investments.
Rich people only invest in a handful of things. They use what they know works for them. They have their ways of how they can validate an investment. They educated themselves well and know what they are doing.
Warren Buffett, one of the wealthiest people on our planet said it best: “Risk comes from not knowing what you are doing.”
Falling in Love With Your Investment Too Much
Another mistake is getting too attached to your investment. Maybe you bought stocks from a company you love and now you are reluctant to resell them. Or perhaps you acquired a piece of real estate, put a lot of work into it and can’t bring yourself to sell it now. That’s a problem. When you want to invest successfully, you can’t be too attached. Focus on your goal to multiply your money instead.
Lack of Patience
No matter if it’s a low risk low return investment or a low risk high return investment, you will need some patience. You won’t multiply your money overnight. Be careful not to give up too soon. That could cost you time and money.
Turnover Too Fast
Some people make the mistake of turning over their investments too fast. They acquire something and sell it the next moment. The problem with this is, it will potentially cost you high transaction costs. Be mindful that your investment actually covers the expenses before you make the turnover.
Putting All Your Money Into One Thing
Usually, it makes sense to stay flexible and not to put all your money in one single investment. But it’s better to have three investment plans in place rather than putting all your eggs in one basket. Have one investment that generates you money in 30 years, one that generates money in about 10 years and one for the next 5-7 years.
Letting Your Emotions Rule Your Investment Decisions
Don’t fall into the trap of letting your decisions be influenced by fear, greed, love, or other emotions. For example, sometimes, an investment might not do well for some time and you get afraid. Out of fear, you want to make a quick turnover to save at least a little bit of money. I would be careful with that.
It’s also important to keep your ego in check and not to get greedy. Some people make some investment successes and get over-confident. They think they can handle it all and jump into risky investments. Investing in a smart way is a lot about keeping your cool.
Understand Different Types of Risks
Now, to understand why low risk low return investments are likely wasting your time, you also have to understand that there are actually different kinds of risks. It’s good to know this so you can evaluate your investments better. Usually, risks can be divided in two forms, systematic and unsystematic risks.
Systematic risks are also called market risks. It encompasses the potential risk that your investment will lose value in the market. It’s usually a risk you can’t avoid because it affects the whole market. This could be due to political changes for example.
Unsystematic risks are connected to certain companies or industries. Such a risk could occur, for example, if you invest in a business and a new, strong competitor pops up. Unsystematic risks are a bit easier to avoid. Most people avoid them by varying their investments. Understanding these two types of risks will already give you a better understanding of what you are doing.
What To Focus On Instead Of Low Risk Low Return Investments
I briefly touched on this, that instead of investments that give you low returns, you want to focus on low risk high return investments. High return means that you will get more return, and often much faster. You make some money with your investments and then you can use that money to re-invest.Rich people leverage low-risk, high-return investments. They usually don't take big risks with their money, but they want a good ROI. So, what the rich really invest in, is a limited number of things. They invest in the right things. Click To Tweet
Again, I can’t tell you what you should invest in, because you should only invest in something that you understand. It depends on your background, how much money you have available and many more things such as your own knowledge base. Take my advice, but make sure it actually applies to you.
Master The Habit Of Investing
If you are just starting out, you want to focus on developing the right habits when it comes to investing. In the beginning, it’s not that important that you get huge returns. Investing is a habit and habits have to be built. So it’s okay to invest let’s say $100, and maybe you get back $120. That way you just made $20 with your investment. It’s not a huge sum but that’s okay. It proves to your critical mind that investments do work.
So, build your investment skills and slowly increase your budget. You don’t want to stick with low risk low returns investments forever.
High Return Investments For Beginners
Now, if you’ve already built your habit and want to start investing a bit more, it’s crucial to focus on high-return investments. This way you make sure you aren’t wasting your time. I want to share some potential high return investments with you. I’m not saying they are the only ones that work. These are just a few examples of investment types that lots of wealthy people use.
Invest in Yourself
Investing in yourself is one of the best investments you could make. Rich people continuously invest in themselves. It could be something easy as reading a new book. It could also be taking an online course, or attending a seminar. You expand your knowledge and upgrade your skills this way, and then you can bring even more value to the marketplace.
I love investing in myself because it has zero risks. If you learned something valuable, nobody can take that away from you. Investing in yourself definitely gives you an advantage in life.
It has a huge benefit because as you learn to improve your skills, you can deliver much more value to your customers. And that means you will probably increase your income. When you have more income, you also have more money for future investments. That’s why the rich get richer.
Invest in the “Big Three”
What is the “big three”? Stocks, businesses and real estate are the three investments that have made the most millionaires. There might be a few exceptions but usually, it’s one of those three things. So don’t fall into the trap of jumping on to every new investment trend. Success leaves clues and you can follow that. Stocks, businesses and real estate are low risk high return investments. They are very active investments that get you great results in 5 to 7 years.
Within the big three, there are of course many different categories. There are different forms of stocks, different methods to invest in real estate and so on. So you might want to pick one that makes sense to you. Pick something you already understand or take some time to understand it. You don’t have to know everything – nobody could do that as there is simply so much information. But the last thing you want to do is to invest in something you don’t understand.
There are many different forms of stock investments. They potentially give you huge returns and have a relatively low risk. That’s why many wealthy people like to invest in stocks. But you need to learn about stocks, and understand it, before you can invest.
There are many different possibilities to invest in businesses. For example, you could invest in startups or small businesses. You could invest some cash and get a part of the profits in return by owning equity.
3. Real Estate
I personally invest in real estate, because it’s an investment method I understand. Again, there are many possibilities to specialize in real estate investments. You could invest in different types of real estate, such as office buildings (commercial real estate) or residential.
Honorary Mention: Tax Lien Certificates
If you are really tired of low-risk low return investments, I have a special tip for you.
Tax lien certificates are a cheaper alternative to real estate investing. This type of investment method is relatively unknown, but many wealthy people in North America use this investment strategy.
Basically it works like this: When a person owns a property but can’t pay rent, the state attaches a tax lien certificate to it. You can buy this and gain steady returns. Imagine it like you would buy another person’s debt and the state is paying you for it. With this kind of investment, you could make steady returns of 24%, 36%, or even as high as 58%.
Discover The Investment Secrets Of The Rich
Almost all rich people are smart investors. Their investing secrets are closely-guarded.
What would it mean to you if you could learn the investment secrets of the rich? On February 23rd to 24th, I’m hosting a special event called “Secrets Of The Rich” in Vegas.
This exclusive event is a perfect opportunity for you to invest in yourself, and learn a new investment skill. Once you are able to invest like the rich, you don’t need to rely on low risk low return strategies anymore.
Now, there is good news and there is bad news. The bad news is, the Secret Of The Rich event is sold out. So you can’t attend in Vegas.
The good news, however, is due to the high demand, we decided to offer a live stream of this event to certain people. If you get live stream access you will also receive a full recording of the seminar.