Protect YOUR Money! 7 Safest Investments Ranked in 2024

 Introduction to Safer Investments

In this section of the YouTube video titled "Protect YOUR Money! 7 Safest Investments Ranked in 2024," the speaker discusses the importance of having a portion of one's portfolio in safer investments during times of market volatility and economic uncertainty. He emphasizes that while CDs and savings accounts may be safe, they do not offer significant returns to help reach financial goals. Instead, he recommends bonds and real estate as safer investments that will keep money working while providing returns.

00:02:00 - Bonds as Safe Investments

Bonds, specifically those issued by highly-rated companies, are considered extremely safe investments, with less than one in a thousand bonds defaulting. Although the yields on high-quality bonds are relatively low, ranging from 5.4% to 5.7%, they offer an additional potential price return when interest rates fall. Bond funds like the Vanguard Long-Term Bond ETF and the iShares Investment Grade Corporate ETF are recommended for most investors due to their low fees and ease of buying and selling.

00:03:00 - Real Estate Investments

Real estate, both investing directly and through real estate stocks, is another safe investment that has historically produced solid long-term returns and protected against inflation. Real estate companies have produced an annual return of 10.9% since 1972, surpassing the NASDAQ index and the broader S&P 500 Index. While individual real estate stocks may not go up every year, they should provide a solid long-term return and help lower overall portfolio risk. For those who prefer not to manage properties directly, investing through platforms like Arrived Homes, which allows investors to invest directly in individual homes, is suggested.

00:05:00 - Preferred Shares

The speaker discusses preferred shares as one of the safest investments. Preferred shares are a hybrid investment between stocks and bonds, offering some of the safety of bonds with the potential upside of stocks. These investments usually offer higher dividend yields than regular stocks and are paid before regular stockholders in the event of bankruptcy. Preferred shares can be converted into regular stocks if the share price reaches a certain point, providing potential growth benefits. Warren Buffett is known to be a fan of preferred shares, having invested $5 billion in preferred shares issued by Goldman Sachs after the 2008 crash and making significant returns. For investors in higher tax brackets, preferred shares can offer attractive after-tax returns due to their qualified dividend status. Preferred shares can be purchased on any investing platform or through ETFs for instant diversification.

00:07:00 - High Yield Bonds

The speaker then moves on to discuss high yield bonds as the next safest investment.

00:10:00 - Balanced Portfolio and Safety Sectors

The speaker discusses the importance of having a balanced portfolio with both stocks and bonds, but also emphasizes the need for safer investments, even for younger investors. He suggests adding preferred shares of real estate and other types of investments to maintain safety while keeping returns higher. The speaker emphasizes that even young investors need a portion of their portfolio in safe investments to buy back into the market after a crash and take advantage of lower prices. He then introduces the concept of safety sectors, such as consumer staples and utilities, which sell necessary products and have less uncertain earnings, resulting in smoother returns. The speaker advises investing broadly in these sectors through sector spider funds, such as XLP and XLU, which offer relatively low dividends but have produced consistent returns over the last decade.

00:12:00 - Dividend Stocks

The speaker also mentions dividend stocks as another safe investment option, despite their inherent risk, as they tend to follow the broader stock market less closely and are often older, more stable companies.

00:15:00 - Dividend Stocks and Funds

The speaker discusses the merits of dividend stocks and funds as safe investments. Specifically, he mentions the Schwab US Dividend Fund (SCD) as an example, which provides a higher dividend of 3.6% and comparable total return. The speaker emphasizes the safety of receiving regular dividend payments and suggests watching a subsequent video for his current picks for monthly dividend stocks.

00:17:00 - Diversification for Lower Risk

He also advocates for diversification by combining different asset classes, such as real estate, bond investments, and dividend stocks, to lower risk and reduce stress in investing. The speaker recommends selecting three or four investments from this list, including real estate, to add to one's portfolio for strong returns and regular dividend cash flow.