Imagine heading forward to an investment agency and asking for a risk free portfolio, i.e. a portfolio with minimum possible risk having maximum possible returns. Well, they will straight away show you the door out. This is because there is no such thing as a risk free investment. No matter how much you diversify your portfolio, there is ought to be some risk associated to it. However, people can always try and reduce risk to a certain level in order to gain maximum returns out of it. Let’s have a look at some of them;
Dividend paying stocks
There are many companies out there that have the capacity to pay high dividends to investors rather than reinvesting back in their company. This makes it a lot easier for the investors to recover their investments in a shorter span of time. If the dividends yield is low, the payback period for the investor would automatically increase making problems for the investor. Apart from this, the dividend paying stocks help the investor in becoming a part of the capital gains of the company. The excellent dividend yield ratio when joined together with the capital gains can be a perfect pick for the investor.
Another very effective option that people can opt for is that they invest in preferred stocks rather than relying on the common ones. The most basic part about the preferred stocks is that they are traded in a very tight range. In addition to this, the preferred stock pay a regular dividend that we have discussed earlier as our ideal choice. Irrespective of the financial conditions of the company that year, the preferred stockholders are bound to get the dividends. This will help the investor in getting the portfolio with minimum possible risk.
Investing in annuities
People are hesitated when it comes to investing in annuities. People are not really drawn to annuity as they involve a large cost upfront. However, the truth is that annuity are an excellent investment in case one is looking forward to a less risky investment. The only thing that people need to assure is that they contact with a good financial advisor in order to get knowledge about the annuity payment. The only problem is that the annuities have a much more complexed financial calculation which is why people tend to avoid annuity. The best way to get rid of this complexity is to contact a financial advisor for help.
Invest in portfolios
It is best for investors to diversify their risks. Without thinking much, people tend to invest in the portfolio that offers the highest returns on face. As much as it is a good option, it is not always the way to go. It is better that people invest in different portfolios in order to diversify their risk. If people invest in Project A and B, and Project A fails to deliver; it is possible that Project B earns more and covers up for the loss of A. For having a good idea about the stock brokerage, feel free to contact the Australian stock brokers at any time.