Well, it’s important before you read this article further to know that nothing is risk-free on the stock market. The stock market can collapse any time. However, the stock market always bounces back. Otherwise, we would be left without an economy. But there are some investment strategies that allow you to make consistent earnings pretty much “risk-free.”
In this article, we will go through two strategies that carry relative low risk. Which Investing Strategy you should choose depends on your personal preferences.
Index investing
This is probably seen as one of the most “risk-free” strategies out there in the investing world. An index is pretty much a collection of multiple stocks thrown together in a basket (index), and so they together make up the price. If the prices of one stock in that index drops, so will the price of the entire index. But here is where the risk management and risk spreading comes into play with an index. If one stock performs badly in an index, a bunch of other stocks might be doing well, thus balancing the price and cancelling out the loss on that one stock.
An example of a good index stock worth checking out is probably the S&P 500. This is a very well known index that is a collection of the 500 best performing stocks in the US, hence the name. This index has been making investors about 10-12% richer each year. Accounting for inflation and you’re still looking at a nice steady gain. This average of 10-12% has been recorded in the past 50 years, even with the crises the stock market had faced.
Dividend investing
If you are someone who is investing for the long-term, this might be the one for you. Dividend investing is all about reinvesting your profits and creating a sort of snowball effect, scaling up your investment to insane numbers. Dividend investing is extremely powerful in the hands of the right trader and investor who has the discipline to avoid pulling out money from time to time.
The downside of dividend investing is that you still have to pick out individual stocks which can be tricky, going through all the analysis of each company. However, there are many people online that share their dividend profit portfolio and give you an excel sheet of how much you should expect to earn.
Another great thing dividend investing is known for is passing on generational wealth.
