Many people in the US and across the world put their surplus funds in stocks, aiming for bigger returns and amassing huge wealth. However, they may lose their fund value during a stock market crash. So, if you are looking for steady returns and want to protect your hard-earned money from such volatile markets, treasury bonds offer steady returns.
One of the best investment strategies to grow your fund value without any risk is to park your money in US Treasury bonds. You can consider these bonds, which are backed by the US government, to save for your retirement or to pay for a new home. The tenure of these Treasury bonds varies between 20 and 30 years. Interest on these bonds is paid every six months. Investors will receive the face value of these bonds at maturity. You can enjoy a yield of between 1.3% and 2.3%.
The best choice during high inflation
Despite offering stability, these Treasury bonds barely keep up with growing inflation. The inflation rate in the US is now very high. A reputed stock broker and analyst, Joseph Scott Audia, suggests considering TIPS (Treasury Inflation Protected Securities) or I Bonds, which are other government-backed bonds in the US, during times of high inflation and low-interest rates.
Seeking the security of a fixed income
If you are ready to take a bit of a risk, investing in corporate bonds is one of the best investment strategies. You can enjoy the security of fixed income and better returns compared to Treasury bonds. You will invest your funds through corporate bonds in private companies. These funds will be used by private companies for working capital needs, expansion of business, paying off high-interest debt, new product development, marketing strategies, etc. They have a history of paying better returns to investors like you.
Most often, investors do not have access to investing their funds in individual companies’ corporate bonds. Exchange-traded funds (ETFs) and mutual funds hold several corporate bonds. You can buy ETFs and shares of mutual funds, which invest in corporate bonds and offer higher returns. Joseph Scott Audia will help you pick the right ETFs and mutual funds to enhance your fund value with lower risks compared to higher-risk equities.
A renowned investment adviser in the US tells you that good-quality corporate bonds offer solid and steady returns. For instance, SPBO (the SPDR Corporate Bond ETF) offered a return of 8% in the three-year trailing period. The SPBO even offered positive returns to investors in the COVID era. However, you may get lower returns if their tenure is stretched to 5 to 10 years.
If you are seeking investment avenues with ultra-low risk, money market funds are your best bet. Money market funds invest money in short-term securities. Therefore, money market funds are the best investment strategy for those seeking low-risk investments outside of government bonds. However, the returns from these investments are very low, in the order of 0.01%. Hence, you may keep a small portion of your funds in money market funds.
Investment in gold is preferred during times of market volatility. The value of gold increases significantly when the market struggles. In the current scenario of bank collapse in the US, many people are investing in gold.