The primary purpose of safe investing is to protect your principal investment. Secondly, a safe investment should provide the best interest income possible.
With that being said, your important investment decisions must be made with a clearly-defined return goal in mind. Therefore, before selecting the best investment, you must decide what your investment motivation is.
- Need current income?
- Want growth so investments provide income later?
- Consider safety a top priority?
Unfortunately, investments of all types have risk; even the best and safest ones. Regardless of the type of investment you make, you can expect that your money will be exposed to three types of risk:
- loss of principle,
- loss of purchasing power (due to inflation), and
Nevertheless, investment experts recommend that investors commit the equivalent of three to six months living expenses toward the purchase of safe investments. Furthermore, the less secure your employment is, or the closer to retirement you are, the more money you may want to keep in your best and safest investments.