Constantly chasing high yields is fraught with risk, since the assets promising such returns usually have high volatility.
To bring the much-needed stability to your investment portfolio, especially during times of economic uncertainty, you should consider investing in these time-tested financial assets.
Here are five investments that can increase your financial stability over the long run.
U.S. government bonds
They may not be as attractive as stocks or other speculative assets, but when it comes to long-term stability, U.s. Treasury bonds set the gold standard.
Bonds issued by the U.S. government are always popular among investors looking for risk management.
If you want long-term protection from inflation, the Series I savings bonds with 30-year maturity period are worth a look. The bond has a combined rate of interest, with one fixed rate and another inflation rate that is set every 6 months.
You can either cash in the full amount with interest at the end of the 30 years, or earlier at the cost of the last three months of interest.
Series I bonds are available at a minimum value of $25 and a maximum annual value of $10,000 (both electronic bonds).
Farmlands
While the demand for other materials, products, and services may rise and fall, there will always be a constant (and rising) demand for food. This makes farmlands a surprisingly stable and attractive option for savvy investors.
Since inflation increases the cost of essentials like food, grains, and agricultural produce, the returns on farmland investments can provide some welcome boost to your portfolio during adverse market conditions.
For reference, the volatility of the S&P 500 is twice as high as farmlands, according to farmland investment manager FarmTogether.
Although S&P 500 offers higher investor rewards, farmlands are not too far behind and far more predictable.
Blue-chip stocks
While new and promising startups and new age technology companies come with immense growth potential, they also carry a high amount of risk.
The older industrial and consumer staple stocks may be boring, but they also tend to be financially much more stable and consistent in the long run.
The regular cash payments you get in the form of dividends is just one of the myriad benefits of investing in these companies.
If you have a portfolio that is over-weighted towards newer, high-yield growth stocks, consider allocating some funds towards dividend paying stocks for balance.
Certificates of deposit
If you prioritize stability over high liquidity, certificate of deposits (CDs) are another great option for your portfolio. Offered by most credit unions, banks, and brokerage firms, these are a type of savings product that provides interest income.
CDs are among the safest investment products out there, since they come with fixed interest income and the backing of the FDIC. With interest rates higher than savings accounts, and better protection against volatility compared to stocks, CDs are excellent for balanced portfolios.
Savings accounts
Savings accounts are incredibly unattractive to investors since they offer the lowest interest rates with the least growth potential. If you shop around though, increasingly you can find banks offering savings accounts with rates near that of government bonds.
Most of these high-yielding savings accounts come with withdrawal restrictions and fluctuating interest rates. In the future, you may not have that same attractive yield you signed up for.
On the plus side, savings accounts are stable by definition and backed by the FDIC.
