Retirement Investing Doesn’t Have to Be Scary: Tips For the Risk-Averse Small Business Owner

Posted in Strategy, Tips

Have the stock market’s woes over the past few years scared the daylights out of you? Do you now associate investing with rolling the dice in a casino? If so, you’re not alone.

Believe it or not, investors are not always high-risk individuals. Many investors do so conservatively to minimize the risks of doing so.

Conservative investing could be an excellent strategy for your small business if you and/or your employees are otherwise nervous about investing. There are plenty of investments on the market for both you and your employees to place in the SEP IRA, 401(k) or whatever other type of investment vehicles you may have established for your firm. How can you invest without too much risk?

Money Market Accounts

Your retirement plan may give access to money markets. These are very low risk investments that are somewhat similar to savings accounts. You may want to put a portion of your retirement savings into a money market, but not all of it, as the yields on such accounts are very low. In fact, if you were to put less than $10,000 into a money market as of the time of this writing, you could expect to earn 0.47 percent on it, according to


A bond is essentially a loan that you give to a corporation, government, municipality, federal agency or other similar entity. For example, the US Government issues bonds that are backed by it’s virtually infinite power to collect tax revenues.

Bonds are generally low risk. As such, the rewards for investing in them are generally lower than on riskier investments. Still, the longer you invest your money in a bond, the greater the yield will typically be. For example, 1-year municipal bonds currently average 0.234 percent while 30-year bonds average 3.477 percent. Neither of these is a great rate, but it’s more than you’d get if you otherwise wouldn’t invest at all.

Certificates of Deposit

A certificate of deposit, also known as a CD, is basically a loan to a bank. You’ll give them a certain amount of money that they can hold on to for a set period of time. At the end, they’ll pay you back with your principal and interest.

Like the other mentioned investments, you won’t earn much on a CD. In fact, the highest current yield that is available on the market is 1.15 percent. However, these are very low risk investments, meaning that the chance of losing your money is very slim.

The Bottom Line

Conservative investments won’t make your retirement plan balloon anytime soon. However, you and your employees can benefit from such investments if you would otherwise stay away from investing, as you’ll at least earn some interest and put away money for retirement. Also, with the plunges that the stock market has taken in recent years, having your money in a low risk account wouldn’t have been so bad.

Speak with a financial adviser to determine which investment portfolio is right for you. He or she should have you and any interested employees fill out a questionnaire to determine your risk preferences and help you invest accordingly. Remember, you won’t earn anything at all by leaving your money in an interest-free account and you will probably need your own income during your retirement years, so it is best to put some money aside, even if you are generally nervous about investing.

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