We are in a persistent low interest rate environment and this shows no apparent indicators of changing in the near future. Many people who have been accustomed to getting 5% and higher produces on CDs, treasury bonds, and other “safe money” musical instruments are now confronted with increasing maturities and have to decide how to proceed with the funds.
What should risk averse investors (or investors who keep a few of their profile “safe”) do with these funds? If you have older instruments maturing, there aren’t many palatable choices. Investors really have two options: accept lower comes back, and stay “safe,” or accept more risk and hopefully create higher returns. Before one decides which of these two paths to take some soul searching is to be able.
= $ =pWhy have these money were held by you? What is your tolerance for loss? If you lose a few of the principal of these funds, exactly what will the impact be on your way of life and financial position? Do you have to earn the very least amount of return on this money that exceeds what “safe” equipment currently offer? The answers to these questions will drive the decision you make ultimately.
If you merely cannot accept the reduced returns currently offered by “safe” instruments, you shall have to take more risk in order to make your minimal come back. Conversely, if you fail to accept any risk to the main of these funds, it might be better to accept … Read more