NYSE: MRK is one of the two Big Pharma names in the Dow, and it handily outperformed the markets in , now that much of the patent cliff drug patents expiring has slowed and with new drug sales coming from multiple cancer targets from Keytruda. Finally, holding individual stocks rather than dividend-focused ETFs or mutual funds protects the full income you signed up to receive while keeping you in full control of what you own. And yes, Walmart has done more to revolutionize retail than any company in history at least until Amazon came along.
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When you decide to invest your hard-earned money, it’s tempting to look for investment vehicles that speak of a «huge return» in a short time frame. Unfortunately, while you do have a small probability of making a large return, you have a much larger probability of losing your hard-earned money. If you’re young, you have possibly decades to make up for risky investment decisions, but as you age, it’s more important to keep your money safe and grow it at a slower, but more reliable rate. You can open one in person, online, or over the phone. The opening minimums are normally low, and banks will allow you to have multiple accounts, for example, for minor children, to help you save for short or intermediate term financial goals.
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The world is running out of safe, reliable sources of steady income. One of the best remaining sources: U. Government bonds Treasury bonds are fixed-income securities maturing in more than 10 years. Government debt is considered among the safest of all investments. Corporate bonds are issued by companies, which have great flexibility in how much debt they can issue. Terms for corporate bonds can be anywhere from less than 5 years to more than 12 years.
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When you decide to invest your hard-earned money, it’s tempting to look for investment vehicles that speak of a «huge return» in a short time frame.
Unfortunately, while you do have a small probability of making a large return, you have a much larger probability of losing your hard-earned money. If you’re young, you have possibly decades to make up for risky investment decisions, but as you age, it’s more important to keep your money safe and grow it at a slower, but more reliable rate.
You can open one in person, online, or over the phone. The opening minimums are normally low, and banks will allow you to have multiple accounts, for example, for minor children, to help you save for short or intermediate term financial goals. The main benefit of a savings accounts is the safety of your money.
If the bank fails and can’t provide you with your money, the FDIC will make arrangements for you to get your money. These accounts also offer flexibility and easy access to your money. You can put in small or large amounts often and take your money back out when you need to. Bank savings accounts are ideal for emergency funds for unexpected life events such as a job loss or prolonged illness.
The interest rates earned on bank savings are likely to be lower than inflation rates. If you plan to have a savings account, consider an internet bank. Internet banks have the same level of protection and offer much higher interest rates than a bricks and mortar bank down the road.
The biggest differences with CD’s compared to bank savings accounts is that CDs pay slightly higher interest rates. If interest rates have fallen during this holding period, then you are likely getting a better rate of return than you would have gotten in a bank savings account or money market. CDs are issued from many banks and can be bought or sold directly from a bank or through brokerage companies like Schwab or Vanguard.
If you put all of your money into one long-term CD and then need it back at any time, CD’s may not be the best for you. If you have to sell a CD before its maturity, you may get less than what you put in.
It’s always best to plan ahead and align your CD maturities with dates where think you will need the money. For example, if you always pay taxes in April or take a family vacation in December then having CDs mature around those times may make sense for you. Be careful to notice any special features of the CD before purchasing.
Some CDs are «callable,» meaning they can pay you back early if they desire. Callable CDs benefit the bank if interest rates go.
In that case, the bank will call in callable CDs. You will get your money back, but now you are holding cash that has to be reinvested at the current lower interest rates. It benefits the bank because they can issue new CDs that pay a lower rate. Callable CDs typically pay a higher interest rate because you are not guaranteed to receive that interest rate until the maturity date. With a non-callable CD you know you’ll get the stated amount of interest as long as you hold the CD to maturity.
Again, look at Internet banks. They often have higher rates for CDs. Some also have creative terms that allow you to invest more into the CD a few times during the term, for example. Investments issued by the U. Government are considered very safe. The United States government has what’s called «full faith and credit» for its ability to repay investors of issued securities, and has a two hundred plus year history of doing so.
It can do this by selling more securities, collecting taxes, or printing more money. The U. People want to own these types of investments for their high degree of security, so a market always exists to sell your U. If you are not able to hold onto them until the specified maturity date, you can still get a fair market price when you sell.
There are a wide variety of investments available, ranging from bills, notes, bonds, U. Some of the investments pay current interest, for others, you buy at a discount and get your return upon maturity.
For people who don’t need interest payments now, they can purchase zero-coupon bonds. Interest on Treasury securities is exempt from state and local income taxes but is subject to federal income taxes. Probably the only drawback to government issued securities is the low return on your investment. Safety comes at a price. Unlike a CD or bank account where these companies compete to get your money, the U. Rising inflation and rising interest rates have varying effects on different types of government bonds.
Depending on the type of government bond you own if you sell it before maturity, you could get back less than the original amount you invested. The primary benefit of a money market fund is the active management of very short-term investments. A mutual fund company has professional researchers, analysts, and traders that manage a large group of investors’ money with the goal of doing better than what the Treasury yield will do in the same period.
Bear in mind; we are safe stocks for seniors to make money about very small increments of return. Because of the short-term nature of the fund objective, investors generally have the ability to put money in or take money out any time.
However, some money market funds have higher minimums or limited liquidity. This allows the fund a more consistent use of investor money, and thus funds with higher minimums or limited liquidity often pay a slightly higher yield. A common theme with safe investments is the inability to compete with long-term inflation rates. When interest rates are low, it is more difficult for a money market fund to produce a better income yield for investors.
It is mainly due to the costs of operating the fund. There have been examples recently in the U. In terms of safety, the main drawback is no guarantee by the «full faith and credit» of the U. This coverage is different from FDIC because it covers your money if the brokerage firm goes out of business, but it does not insure the value of your investment against market losses. A fixed annuity is safe stocks for seniors to make money contract with an insurance company.
You give them your money to manage, and in exchange, they pay you a guaranteed return. Usually, the interest on a fixed annuity is tax-deferred. Fixed annuity investors lock in a rate of return. You know what you will get and when you will get it. This may sound like a CD, but it is different.
Your rate may be slightly better than a CD, but it is dependent on the financials of the insurance company that issues the annuity. Because insurance companies are regulated by State statutes, if the insurance company goes bankrupt, the State will step in with their support and guarantee funds to settle claims per allowed limits.
You can get more information at the National Organization of Life and Health Insurance Guarantee Association website and click on your state’s association.
Annuities suffer the same concern with safe investments, that returns will not keep up with inflation. Having a guaranteed and safe return on part of your retirement investments is a good idea, but keep in mind there can be hefty penalties and taxes to get your money out of an annuity early. Additionally, annuity investments are typically offered by insurance companies, and you run the risk of the insurer filing bankruptcy and never paying out on your policy.
Finally, some financial advisers would rather you use safe investments found in the investment market instead of the insurance market because the annuity may have higher costs associated with administering the product than other investment types. Safe Investments Investment Income Glossary. Investing Safe Investments. By Dana Anspach. Bank Savings Accounts. Certificates of Deposit CD’s. Treasury Issued Securities. Money Market Mutual Funds. Fixed Annuities.
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