Risk-Moderate Investments: Which Types Are Best?

Moderate-risk investments are a good option for those looking for a best of both worlds approach. They may not have the stability of CDs or high-yield savings, but they can provide impressive returns, making them worth considering if you can handle slightly higher uncertainty. While every analyst has a different opinion on the “riskiness” of an equity, dividend stocks often fit the mold of “medium-risk investments”. This is because these stocks offer consistent payouts, which cushions potential losses should the stock drop in value. Other examples of moderate-risk investments include corporate bonds and preferred stocks.

Dividend stocks

If you're considering investing in dividend stocks, it's important to do your research and diversify your portfolio to mitigate risk. You can use tools like WallStreetZen’s Dividend Stock Screener to find out more about the dividend history and yields of publicly traded companies.

Corporate bonds

In terms of duration, corporate bonds can be short-dated, medium-dated, or long-dated. Investment-grade corporate bonds are usually issued by established companies and are considered lower risk. Conversely, high-yield bonds (sometimes called junk bonds) carry a higher risk of capital loss but have the potential for higher income.

Preferred stocks

Moderate-risk investments are a good option for those who want to take on a little more risk for a higher potential return. While they may not have the stability of CDs or high-yield savings, they have the potential to provide impressive returns. They are also a good option for those with a moderate risk tolerance, who want to take a balanced approach to investing.

Overall, preferred stocks can be a good option for those looking for moderate-risk investments. They offer the potential for higher returns than low-risk investments, while also providing some stability in the form of fixed returns. However, it's always important to remember that any investment comes with some risk, and it's possible to lose money even with moderate-risk investments.

Large funds

One example of a large fund is a corporate bond, which is like a small loan from an investor to a specific company. Another example is a preferred stock, which offers a fixed return to investors, similar to a bond. Preferred stocks are ownership shares of a company that offer shareholders priority over common stockholders regarding dividend payments.

Shares

One way to mitigate risk when investing in shares is to diversify your portfolio. This means investing in a variety of different companies and industries to reduce the impact of any one investment on your overall portfolio. Another way to reduce risk is to invest in strong, established companies as the risk of investing in these companies can be relatively low.

It's important to note that while shares can provide impressive returns, there is also the potential for loss. The value of shares can drop, and there is always the potential for a dividend cut. As such, it's important to carefully consider your risk tolerance and investment goals before investing in shares.

Frequently asked questions