Safe Investments With High Returns: Get a Guaranteed Rate of Return on Your Money

Daniel Penzing
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safe investments with high returns

These days more and more mutual funds are being structured to "protect" investors against market drops and to provide a guaranteed rate of return on their money.

Can they really deliver, or are they just another form of the "gimmick" investments that proliferated after the 2008 stock market crash?

The difference lies in the types of investments that are protected. Rather than using all stocks or all bond or derivatives, some mutual funds now offer various types of insurance protecting the customer from market loss and guaranteed returns.

A "put option" guarantees the investor that if his or her money is not invested within a certain period of time, the financial institution that sold that option must return the money. A "forward contract" to buy investments is taken out by the investor, but can be assumed by the financial institution for the investor if future returns are not gained.

These kinds of contracts have been around for a long time, traditionally for people who are too busy to actively manage their own money.

Fast forward to today, with a high market and concerns about the future. Guaranteed rate of return contracts have been made available to the everyday investor.

As always, there are advantages and disadvantages to the guaranteed rate of return programs.

Safe Investments With High Returns

It seems so many people live a permanently in the red these days. We have forgotten the importance of making a profit and are just as happy to lose money. Investing is another passion of mine, and I get so sick of hearing every excuse in the book why the person in front of me is unable to invest. A lot of my friends sit on their hands and do absolutely nothing, and it is so frustrating. It is one of the reasons I set up my own personal finance as well as investing blog. I wanted to teach people how to take control of their own finances and provide some advice on some great investment ideas that are out there. When people see the amount of time and money I have invested into my blog, it always surprises them.

All my time, effort, and money has rewarded me well though. I wanted to also give you a very brief idea of how I am able to run a successful business and still have an hour every day to spend with my family.

High Dividend Stocks

Are Your Best Bet!

So you are not happy with your standard bank account at a measly 1% return.

But you are not yet ready to gamble in stocks or shares where you could get all your money back lost.

Investment markets have returned good returns this year and so far (2014) the markets have made a lot of profits.

But what if you had gone all in on Bitcoin now? Would you still be smiling?

Or would you have been much better off if you just put your money into companies that paid a certain return on your money?

What if I said you could have a guaranteed 15% return on your money, in 2015? Where could you get your hands on such a great investment?

Easy, in the stock market with dividend paying stocks. The returns have been so lucrative that with an annual return of 15% over the last 30 years, dividend stocks have easily beaten the market returns.

The companies that pay good dividends give investors a higher return than the S&P 500 average return of roughly 9%.

This is a type of madness you want to get a taste of.

Now while the overall market may not be your friend every year, the top companies that pay dividends are a sure bet.

Some of the world’s best known companies such as Pepsi, Proctor & Gamble, Pfizer, Johnson & Johnson pay dividends.

Certificates of Deposit (CDs)

Certificates of Deposit are a smart way to invest your money and a good place to start for new investors. They offer the best interest rates in the investment world that you can lock in for an extended time period. This means that you can plan to keep your money invested for the long-term, without worrying about the possibility of losing it overnight.

CDs come in a variety of terms. The longer the term a CD lasts, the higher the interest rate it offers. There are also variations on the typical CD including 90-day and 180-day CDs, or even CDs with custom-sized terms. Another benefit of CDs is that the bank you purchase the CD from typically won’t charge you any service fees or penalties for withdrawing your money early.

The catch with CDs is that you can’t withdraw the money you put in before the term has ended. In some instances, the bank will charge a penalty for early withdrawals, which is generally equivalent to 3 to 6 month’s worth of interest on the CD. You can solve this by purchasing a CD with a longer duration that gives you a higher interest rate to compensate for the penalty.

Money Market Funds

The Safer Investment?

If you invest your funds in a savings account, you'll likely earn a very small amount of interest on that money. The financial bubble of 2008 resulted in a steep drop in interest rates, so it is unlikely that interest rates will rebound for a while yet.

If you have excess money that you don't need to spend right away, a money market fund offers a good alternative to a traditional savings account.

What is a money market fund? A money market fund is a mutual fund that offers short term bond investments for investors. They are required to hold assets with maturities of at least 90 days, but generally impose tighter restrictions.

That is the best one can expect, and it is not guaranteed.

Investors need to realize that the security of the FDIC on investments, do not apply to the accounts that you find at banks. If you actually pay to get a higher rate, you may be setting yourself up for losing your money.

US Treasury instruments have a low default rate, but you could still lose some or all of your principal.

Money market funds are very liquid, and you can withdraw your money at any time. That is part of the reason that they usually don’t offer much more than 2% in interest.

U.S. Treasury Securities

Treasury Securities are loans made by the U.S. Treasury through a network of qualified financial institutions to raise financing for U.S. Government.

Various issues with a range of maturities exist and are issued on a regular basis. The term Treasury Security refers to marketable U.S. Government debt. These are negotiable and transferable securities.

As with all debt securities, Treasury securities are loans. The U.S. Treasury grants its loan and collects principal and interest at specified intervals. Treasury Securities usually pay a higher interest rate than most other investments. It is reasonable to expect to receive a higher return on Treasury securities than on similar-risk investments that do not have the full backing of the federal government.

In the event that the U.S. Government defaults, investors are entitled to certain guaranteed benefits. If the principal of a Treasury Security is not repaid, the issue date of a Treasury Security will be extended so that the investor will still receive the interest due. These protections are known as 'Default Premiums'. These premiums are usually higher than the interest rate that was originally promised.

The U.S. Treasury issues both Fixed-Rate and Adjustable-Rate Treasury Securities.

There are a number of different types of debt securities that are issued by the U.S. Treasury and its agencies. Each one has a specific name and unique characteristics and terms available to the investor.

Treasury Inflation-Protected Securities (TIPS)

TIPS are a type of Treasury security that adjusts the principal value of the bond each year based on changes to the Consumer Price Index (CPI).

This adjustment is calculated in order to protect the bondholder from inflation. Theoretically, this means that the interest rate is always higher so the investor can protect the investments from inflation over time.

Current TIPS pay a rate of interest, calculated every six months, based on the change in the CPI. If the CPI rises 1% for the six months, then the investor in TIPS will receive interest payments of 1%. The principal value of the bond would also be adjusted up.

The interest rate on TIPS is set every six months. So if you purchase a TIPS bond, you need to make sure you can remain invested for a period of two years. That is because the first interest rate adjustment will occur in half a year.

Municipal Bonds

Municipal bonds are essentially the fixed-income equivalent of a AAA-rated corporate bond. In other words, they are probably one of the safest investments you will ever make. A default rate for municipal bonds is—on average—0.1% and the average duration of bonds issued by municipalities is 12 years.

They also have some high yields, particularly if you are looking to invest for a long period of time. The longest-term bonds issued by US municipalities are usually 25-year bonds, which typically yield between 3.5% and 5.5%.

The yields on these types of bonds are directly linked to the prevailing US treasury bond yield. Municipal bond yields will typically move higher if there is a significant increase in the yield on US treasuries. The reverse is also true.

Generally speaking, there are no taxes on municipal bond interest earnings. You and I would have to pay taxes on the interest we earned on regular treasury bonds except that, interest earned on municipal bonds is exempt. The interest is also exempt from state, local, and sometimes even federal taxes.

With that in mind, you will want to stick with US-issued municipal bonds, unless the investment is structurally sound. The main reason why you should stick with US-issued municipal bonds is because the interest payments from foreign bonds are subject to a withholding tax in the US.


There are some investments that are truly safe and guaranteed to generate a high rate of return on your money. Four examples of this are the CD, annuity, bond, and mutual fund. Each has the potential for a return that exceeds inflation, but each comes with a specific type of risk. The higher the return, the greater the risk.

Annuities are a type of investment that is guaranteed by the insurance industry. If circumstances arise in which the insurer goes bankrupt, the law protects your investments. This makes annuities more safe than a savings account.

Also, unlike the other three types of investments mentioned, annuities were created to provide a guaranteed return. They are designed for people who are closer to retirement age and need a secure way to generate income from their investments without risk.

Should You Invest In an Annuity?

Most people who are looking for a guaranteed return are advised to invest in an annuity. This is because the other three types of investments have the potential to decrease in value over time. Just because you invested in a CD, bond, or mutual fund does not mean that you will reap any rewards from it.

However, an annuity is designed to preserve your initial investment. Also, the high return also comes with high fees, although they are usually smaller fees than most bonds. In order to get a guaranteed return on your money, you must give up a certain amount of liquidity.

Paying Off Debt — An Unexpected Guaranteed Rate of Return

Paying off any type of debt has the ability to create massive wealth for you when you start using your money for other things. You can pay off credit card debt with any type of method, but using the snowball strategy is one of the most popular methods.

You don’t have to make the most on an investment to benefit from it. As long as you receive a decent rate of return and it’s a guaranteed rate … you’re making money.

Paying off any type of debt has the ability to create massive wealth for you when you start using your money for other things. The reason for that is pretty simple … you don’t have to make the most on an investment to benefit from it.

As long as you receive a decent rate of return and it’s a guaranteed rate … you’re making money.

Peer-to-Peer (P2P) Lending

An intriguing development in banking, peer-to-peer lending is starting to gain acceptance from the general public. With annual returns equal to the sum of inflation and the annual G