What are considered low risk investments?

If you are wanting to increase the chances of your investment actually making a return than you will probably be happy to know there are such things as low risk investments.

National savings tax-free saving certificates is probably the lowest risk investment a person can make. Especially if they choose the certificate guaranteed to override inflation, which is known as an index-stripped certificate. Each year, there is a certain amount of certificate issues made, of which a person is allowed to invest up to £15,000 in each. Government stocks are also low risk investments and can be bought through a specialist stockbroker. They have twice a year interest payments, plus the stocks minimum value when it matures, which is usually around ten-years after purchase. You could sell them before the maturity date, but the risks of a lower return than you initially paid are much higher.

Cash ISAs are a good way to let your savings grow and any interest you make on your ISA is tax-free. You are allowed to pay up to a certain amount each year in to your cash ISA, which is £5,100, you are also able to make top-up deposits each year. ISAs are popular low risk investments and are most commonly used for young children's savings or as part of a person's retirement portfolio.

While a current account is OK for your everyday banking needs, any savings you have should be placed in an appropriate savings account. Easy-access or instant savings accounts are tailored towards people who like to get to their money without having to give notice. Higher rates of interest are available on notice accounts, where notice ranges from 30 days to 365 days depending on your account type, balance and agreement. Savings accounts will always be low risk investments, especially now most banks ensure the first £75,000 in an individual's account.


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