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Investments for the Risk-Averse

With savings accounts paying practically nothing in interest these days, many people are choosing to put their money elsewhere in order to generate a more substantial return. But what if you’re the type of person who’s really afraid of losing money? After all, most investments carry a degree of risk, and if your tolerance for it is low, your options may be limited.

Traditionally, those who are truly risk-averse would make a point of avoiding the stock market, and while some stocks are safer bets than others, if the idea of losing money is enough to bring on a panic attack, you’re probably better off putting your money into something less volatile. Here are a few options to consider:

CDs

Certificates of Deposit, or CDs, are a relatively safe bet because they’re insured by the FDIC up to $250,000 per depositor. With a CD, you’re locking your money into a fixed rate for a predetermined period of time, but that return is guaranteed. Plus, you can pick the time period for investing that works best for you. If you’re afraid to tie up your money for a year or more, for example, you could open a 6-month CD and snag a better interest rate than what your savings account is offering.

Title Loans

Car title loans are quick, short-term loans that you can get using the equity in your car or vehicle. If you own your car, you can borrow money based on it’s resale value. You need to know that these loans are usually for 60 days or less.

Money Markets

A money market is a type of savings account that typically earns more interest than a regular savings account. Most money markets come with higher minimum balances than traditional savings accounts, and there are usually limits as to how often you can withdraw your funds. On the other hand, money markets, like CDs, are insured by the FDIC, so your first $250,000 is automatically safe.

Treasury Bonds

Treasury bonds, or T-bonds, are bonds issued by the U.S. Department of the Treasury. U.S. Treasury bonds are considered to be virtually risk-free, and while they typically pay less interest than corporate bonds, their interest is exempt from state and local taxes.

Municipal Bonds

Municipal bonds, or muni bonds, are bonds issued by states, cities, and other localities to pay for things like road repairs, hospitals, and school systems. As is the case for Treasury bonds, municipal bonds tend to offer lower interest rates than corporate bonds, but they’re also far less risky. Historically, the default rate for municipal bonds has been extremely low, which means if you purchase municipal bonds—especially those with a higher credit rating—you’re likely to get your principal and interest payments as scheduled. Plus, municipal bond interest is exempt from federal taxes and, in some cases, state and local taxes as well.

The one thing to keep in mind when it comes to investing is that the more risk you take on, the greater your potential to make money. If you’re years away from retirement and have a substantial amount of money on hand to invest, you may want to consider pushing yourself outside your comfort zone a bit in order to generate a better return.

If you do your research or invest with a trusted advisor, you can limit your risk while opening yourself up to a world of profit.

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Tips for Raising Funds Quickly

Businessman jump up toward the economic growth

Businessman jump up toward the economic growth

Whether you’re starting up a new business or have a business that’s going through a rough spot, you’re bound to, at some point, find yourself in a spot where you need to raise funds for your business quickly. Fortunately, there are lots of different options and strategies you can utilize to raise money and get your business off the ground or back on track, whichever the case may be.

Selling Assets

Unfortunately, when your business is in a troubled spot or hasn’t even gotten started yet,  most standard lending options, such as banks and investors, are not going to be willing to help you out. If, however, you have some assets working for you, you may want to consider selling them off and using the money earned toward your business.

Assets can be all kinds of things, such as investments, real estate, stocks, or anything in between. Basically, if it can bring you money, it’s an asset. However, don’t just start selling off your assets. Talk with a financial adviser to determine which assets are the best choice to part with and which ones will actually help you to raise the funds you are in need of.

Help from Community Development Financial Institutions

Before you consider community development financial institutions (CDFIs) as an option, make sure you qualify. This financing option is only available to businesses that are located in distressed areas. If your business does, in fact, qualify, you can see out a CDFI that is certified by the United States Treasury Department and apply for financing.

Financing is typically given to businesses that can prove that they would help their surrounding area in some way, such as by providing jobs to the community. If you think your business might be eligible, it’s definitely worth a shot to apply for financing.

Microloans

Another option you may also wish to consider is a microloan. Microloans are offered through the title loan companies, whose goal it is to make business loans available to a wider range of entrepreneurs. The loans are not very large in nature, hence the “micro” title, but they can really help out a business that needs a little boost to get started or help to get out of trouble. The highest loan amount is $50,000, and you can apply through an intermediary in your area. The Small Business Administration lists all verified intermediaries on its website, as well as information on how to apply and tips for getting your loan request approved.

Asset-Based Loans

Finally, if you have assets but don’t like the idea of completely selling them off, you may want to consider asset-based lending. Asset-based loans are based on your business assets, like your accounts receivable, or other assets you may have. The assets serve as the collateral, and you do stand to lose them if you don’t raise the money to make your payments on time. However, they are a good way to get over a brief hump in your normal business proceedings.

 

These are just a few of many options to quickly raise funds for your business. There are others out there, so if none of these are the right fit for you, consult with your financial adviser to learn about other choices that could work for you.