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Jan 14 2013 12:00AM

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Question

Where is a safe place to invest and still earn a decent return on money? I am 54 and don’t want to put the money in stocks, but the CD rates are too low. Any advice? 

Answer

‘Safe’ is a relative term. To get a higher yield than CDs, you typically would have to consider investments that have some measure of risk. That risk might include market fluctuation, inability to access your money for a while (like a CD), or several other factors. Some insurance products exist that guarantee you a set interest rate that may be higher than CD rates, but you typically have to lock the money up for a few years or more. These could include fixed annuities.  

Alternately, there may be some bond investments that could guarantee you higher rates but there is risk of fluctuation there too. Not to mention, if interest rates begin to rise your bond values could move lower. These could include bond mutual funds.

We are living in a time when savers like yourself who want risk-free returns are not being paid very much. As long as the Federal Reserve maintains its zero interest rate policy and continues to buy agency and/or treasury bonds, we will likely be stuck in this low interest rate environment. The demand for risk-free investments is very high right now, so the overall demand is also lowering the return.

My recommendation is for you to seek the advice of a qualified CERTIFIED FINANCIAL PLANNER (CFP®) from the Financial Planning Association in your area and consider some strategies that are within your risk tolerance and align with your long term goals.


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