The dream of every investor is simple: invest money without risk and still achieve a solid return.
While completely risk-free investing unfortunately doesn’t exist, there are smart strategies to significantly reduce your risks. In this article, we explore the best ways to invest safely, provide valuable investment tips, and explain how crowdfunding can fit into a low-risk investment strategy.
What Types of Investments Carry Little Risk?
Although all investments come with some level of risk, there are types of investments that are known for their relatively low risk. For those wondering, "where can I invest with little risk?" here are a few options that might suit your needs:
- Bonds: Bonds are often considered a safe haven, especially government bonds from stable countries. They offer a fixed return and are less susceptible to market fluctuations than stocks. The maturity of bonds can vary from a few years to decades. Investors receive periodic interest payments (coupons) during the term and the invested amount is returned at maturity.
- High-interest savings accounts: Although interest rates on savings accounts have been historically low, some banks offer savings products with higher interest rates. This is a safe way to grow your money, but the returns are often limited.
- Crowdfunding: While crowdfunding is not without risk, certain projects can be considered responsible investments with manageable risks and attractive returns.
Three Tips for Low-Risk Investing
If you're looking to invest with minimal risk, there are a few key things to keep in mind. Here are three investment tips for those aiming for safer investments:
- Diversify Your Investments: One of the best investment tips is to never put all your money into a single investment. Spread your investments across different asset types, such as bonds, stocks, and crowdfunding projects. This reduces the risk of losing money in the event of a setback.
- Choose Long-Term Investments: Long-term investing often provides more stability and less risk than short-term investments. Historically, markets tend to grow over the long term, even if there are short-term fluctuations.
- Research Before You Invest: If you're asking yourself, "where is the best place to invest?", it's important to do thorough research. Consider the risks, the potential return, and whether the investment aligns with your financial goals.
What Are the Risks of Crowdfunding?
Crowdfunding is an emerging form of investment where you can invest small amounts into projects or companies through platforms like Lendahand. It’s a social and sustainable alternative to traditional investments, but crowdfunding does come with certain risks.
The main risk lies in the enterprises you invest in. Borrowers on Lendahand operate in emerging countries that often have unstable political economies. The projects they offer may fail or underperform, meaning there is always a risk that the loan will not be repaid.
How Does Lendahand Assess Risks?
However, crowdfunding also offers opportunities to manage risks, for example, by investing in solid projects with proven impact, where the risks are clearly communicated. At Lendahand, we provide transparent information about each project so you can make an informed decision.
Each project shows a credit score, which helps you as an investor to assess the risks before you invest. A credit score reflects the creditworthiness of a company or financial institution on a scale from A+ to E. A score of A+ or A indicates a relatively low risk, while a score of E indicates a high risk. As of 2024, Lendahand only offers loans with a credit score of A+, A, B+, or B. The score is calculated based on credit history, financial data, and company performance and is part of our extensive due diligence and approval process.
Why Choose Crowdfunding at Lendahand?
Lendahand not only offers opportunities for financial returns but also for making a positive societal impact. We carefully select our projects and ensure that investors have the right information to make responsible decisions. In concrete terms, this means you can start investing from as little as €10, with interest rates of up to 8% per year, all while contributing to sustainable and social development.
Click here to read a letter from our CEO on how we ensure successful projects.
The low entry amount allows you to start investing without committing large sums of money. By spreading your investments across multiple projects, you can further reduce risk.
To better manage risk, Lendahand regularly collaborates with guarantees, such as those used in higher-risk projects like sustainable energy in Africa. When such guarantees are in place, this is clearly stated in the project description.
Historically, investments in financial institutions in emerging countries have also delivered solid returns. For example, 97.4% of these investments have been repaid on time (within 30 days of the due date), and only 0.37% of these investments have been written off entirely, meaning the loan was not repaid.
By diversifying your investments across multiple projects, you can further reduce your risk and support projects that drive economic growth in emerging countries. Invest with impact and make a difference while building a better future.
Start Crowdfunding with Lendahand
Investing money without risk may not exist, but there are ways to minimize your risk while still achieving returns. Whether you choose bonds, savings accounts, or crowdfunding, the most important thing is that you invest in projects that match your goals.
Curious about the opportunities at Lendahand? From today, you too can invest responsibly in sustainable projects and contribute to a better world. Take a look at our project page now.