5 Low Risk Investments to Protect and Grow Your Money Fast


Stocks have lost 50% of their value in the
last two crashes and it WILL happen again. In this video, I’m revealing five low risk
investments every investor needs in their portfolio. Five ways to make your money work for you
without the roller-coaster ride in stocks. We’re talking safe investments today on
Let’s Talk Money! Beat debt. Make money. Make your money work for you. Creating the financial future you deserve. Let’s Talk Money! Hey Bowtie Nation, Joseph Hogue with the Let’s
Talk Money channel. A special shout-out to all you in the nation,
thank you for spending a part of your day here. If you’re not part of the community yet,
just click that little red subscribe button. It’s free and you’ll never miss an episode. We’re in the middle of the longest bull
market in history with stocks up over 300% since the financial crisis. If there’s anything guaranteed about this
market though is that it won’t last forever. We see here a chart of the bull and bear markets
all the way back to 1956 with average losses in a bull market wiping out 28% of investor
portfolios. This is a dangerous time, especially for those
of you close to retirement. You don’t want to be like so many investors,
set to retire before the housing bubble burst and destroyed their savings. So what I want to do with this video is share
five low risk investments you can use to protect your money while still growing your nest egg. Five investments that won’t tumble the next
time a stock market crash hits. I’ll cover a few low risk stock picks and
show you how to create a stress-free portfolio of stocks. I’m then going to reveal two non-traditional
investments because this is really where you money is going to be put to work. These non-stock investments have the potential
to earn double-digit returns with half the risk. First let’s look at how to pick low risk
stocks for your portfolio, then I’ll reveal three safe stocks you might consider. The first thing you need to know is which
sectors of the economy tend to be the hardest hit by a recession and stock market crash. This graph is based on ten years through May
2014 so it includes good times and bad for the market. I’ve included data here for the nine major
stock sectors, so related groups of stocks with a common place in the economy like financials,
technology and utilities. The red line shows the sector’s beta which
is the percentage it tends to change for every 1% change in the overall stock market. For example, with a beta of 142% for financial
companies, you would expect stocks in that sector to move 1.4% for every 1% change in
the market, and that’s up or down. If the stock market lost 20% then you’d
expect financial stocks to lose 28% which is that 1.4 times 20%. Another example on the other side here. We see that stocks of utility companies have
a beta of just 48%, so we’d expect share prices to move about half that of the market. If the stock market fell by 20%, you’d expect
utility stocks to lose just 9.6% which is that .48 times 20%. This should already give you a great idea
of which sectors and stocks are going to offer lower risk in a crash but we have to look
at this from that return side as well. The blue bars here show the annual return
for each sector over the same decade. We see that shares of utility companies produced
a 10.6% annual return while financials came in with just a 2.7% yearly return. Now the numbers are a little skewed here because
of how that housing bubble hit financial companies but we can still get some great ideas on low
risk, high return investments. So if we look at the sectors with the lowest
risk, those that move less than the market in a crash, we see health care, consumer staples
and utilities are the sectors we want to be researching further. This just makes sense though, right? People need health care and electricity even
when the economy takes a hit. They still buy toilet paper and food when
the stock market crashes. The companies in these sectors have stable
revenue and cash flows no matter what the economy does. Now as you’re looking in these sectors for
the best stocks to buy, I would also add dividends and the operating margin as critical fundamentals. The overall market pays around a 1.9% dividend
yield and I’d expect any company in these safety sectors to beat that. Stable revenue and cash flows means these
companies can afford to pay out more to investors so I would screen for companies with a 2.5%
dividend yield or higher. Those of you in the nation have heard me talk
about the operating margin before but again, this is the single best measure to compare
stocks. The operating margin is the percentage of
sales left over after a company pays all its business expenses like marketing and administration. What it tells you is how efficient management
is at turning sales into profits. So if we look at the income statement here,
we see sales or revenue at the top with $259 billion for Apple. After the cost of goods or materials, the
statement deducts the costs of running the company, these operating costs. Now what you get after removing the costs
of running the business; marketing, administration, all these costs, is the operating profit,
this $64.4 billion for Apple. And when you take that operating profit divided
by the sales number, you get a profit percentage for how efficient and effective the business
is. By comparing that operating margin for different
companies in the same sector, competing companies, you get a sense for which are the best of
breed in that group. You get a feel for which companies are managed
best and are better able to convert sales into profits. Find the best managed companies in the lowest
risk sectors and you’ve got the making of a stress-free portfolio. Now I want to reveal three stocks I found
using these criteria, those safety sectors with high dividends and operating margin. First though, I also want to invite you to
a free webinar I’m giving on how to put together your own personalized investing strategy. This is something I developed working with
private wealth clients and I’m sharing how to do it in this webinar. The webinar is completely free but you have
to reserve a spot so I’ll link to that in the video description below. Our first safety stock here is CenturyLink,
ticker CTL, with a massive dividend yield of 7.8% in the telecom space. Now we didn’t see the telecom sector in
that chart but it’s also one of the lowest risk you’ll find. You’re not going to ditch your cell plan
when the economy slows down. In fact, looking at these safety sectors,
I know a few people I think would forego healthcare and electricity before they gave up their
smartphone. Beyond just that idea of safety, I think the
pure-play telecom carriers could be in for a wave of cash flow as 5G ramps up. They’ve already made much of the investment
in the new technology and we’re just getting into the revenue side of the picture. CenturyLink has a sector-leading 18% operating
margin and, versus something like an AT&T which competes in all kinds of sectors, CenturyLink
is a pure-play telecom company. They’ve got one of the best fiber networks
and aren’t quite as burdened with debt as some of the other carriers. Our next low risk stock is Exelon Corporation,
ticker EXC, and its 3.1% dividend yield. Exelon is the nation’s largest utility company
and produces in both the traditional regulated utility market as well as in nuclear power. That means profits tend to be smoothed out
compared to utilities that only produce from single source types. Among utility companies, Exelon is one of
the best positioned for earnings now on that traditional power & gas segment but also in
the future with its nuclear segment. You’ll notice that I’ve tried to diversify
our low risk stock picks across different sectors. That’s important because even though these
sectors may historically be less risky than the market, you never know how the next crash
will affect parts of the economy. So with that in mind, our third pick is from
consumer staples with Conagra Brands, ticker CAG, and its 3.1% dividend yield. Those of you in the bowtie nation will recognize
Conagra from our 2019 Dividend Portfolio challenge. We added the shares to the portfolio in February
and it’s been one of the best investments with a 43% return in 10 months. Conagra is a leader in packaged foods with
92% of its sales in the United States, something that should protect it as the global economy
slows. The company also has some very strong brands
in the budget-friendly space like Healthy Choice and Banquet that will support sales
if a recession hits in the U.S. Conagra books an industry-leading operating
margin of 17% which is more than twice that of its closest competitor Tyson Foods. The company is only paying out 42% of its
income to that dividend so lots of room here for growth or more cash flow. Now I want to reveal those two non-traditional,
low-risk investments and how to look at these to protect your money. I know we love talking stocks here on the
channel but it’s just as important to have some of your money outside the market with
that crash comes. If we look back on that chart of sector volatility,
even those three safest stock sectors; utilities, consumer staples and health care, even these
three have an average beta of 60% on the market. That means if the stock market crashes 50%
like it did in 2000 and 2009, you could still be looking at a loss of 30% in these low risk
sectors. Having some of your money in these non-traditional
investments means you have another source to grow your nest egg during any market. Picking these two low-risk investment ideas,
I looked at two factors. One was low capital and limited downside. I wanted to find investment ideas that anyone
could start with no money and that it wouldn’t cost you anything even in the worst-case scenario. Of course, I also wanted to see a high potential
for returns. A low-risk investment with limited downside
isn’t worth much if there isn’t the potential for a solid return, so I looked at different
business models and investments that provided both. Our first non-traditional investment is one
of my favorites, tax-lien investing. This is one of the highest-return passive
investments you can make and big piece of my real estate investing strategy. So anyone that owns their home knows the county
collects taxes on every property in the district. If those taxes aren’t paid, a lien is put
on the property and it can’t be sold until everything’s caught up. Well the county needs cash to fix that pothole
on Elm so it’s going to sell the lien to an investor at an auction. The investor buys the lien and collects an
interest rate plus the lien amount over a period of years. What’s great about these is that the county
collects those back taxes and passes the amount owed on the lien directly to the investor. If the lien isn’t paid, you might pick up
the property for pennies on the dollar. Twenty-nine states sell tax liens while others
sell the deed outright and some to a mix approach. We’ll look at the process for liens because
that’s the lowest risk and a great investment. Understand also that you don’t need to be
a resident of that state to buy tax liens. In fact, I used to go to Cook County in Chicago
and Fulton in Georgia all the time to buy liens. The interest rate you collect on liens ranges
from 10% to as high as 36% in some states and the time owners have to redeem the liens
can go as long as four years. That means you could lock in that interest
rate for years. Tax liens work in a couple of different ways
depending on the county. If a property owner falls behind on taxes,
the county puts the lien on the property and puts it on the list for an annual auction. Now you have to register for these auctions
and grab a list of properties, sometimes months in advance so make sure you’re planning
ahead. When you get to the auction, it will either
be a bid down on the rate or a bid up on the price. So each property will be called and investors
will bid the rate on the lien down or they’ll bid the cost of the lien up. Both processes are basically the same and
just mean you’ll get a lower rate than the maximum allowed but you’re still looking
at 12% or higher for most liens. While you’re looking at this list of lien
properties, you might want to focus only on the residential or commercial properties,
no undeveloped land. Anything with a building on it or especially
if it has a mortgage, there’s a 90% or better chance someone is going to pay those back
taxes rather than let you have it for just the price of the lien. Again, once you own that lien, the county
is going to collect back taxes and pass them on to you with interest. If the taxes keep going unpaid, a new lien
will be put on each year so you want to make sure you have enough to buy these other liens
or you’ll have to share ownership with other investors. If the owner never pays the taxes, you can
foreclose on the property after the redemption period which is two or three years in most
states. Going back to our criteria, these are relatively
low cost investments. Taxes on residential property are usually
a few grand or less. You’ll never lose your money because you
either get paid back plus interest or you get to take the property. The return on these is very high and it’s
low risk because the vast majority, especially those liens on residential property are almost
always redeemed. There are some downsides to lien investing
that I want you to know, just so you don’t think this is all rainbows and unicorns. First is that there’s no market to sell
your lien investments, so you better be ready to hold these until they’re paid or you
own the property. Again, you also need to make sure the subsequent
taxes are paid or you’ll have other investors with claims to the deed. Finally, make sure you only bid on properties
you would be fine taking. It’s rare to foreclose on a property because
the bank usually redeems these pretty quickly but the parcels of raw land are sometimes
abandoned so check that auction list when you get it. Our next non-traditional, low risk investment
is going to be to start an online business and maybe you’re not thinking this sounds
much like an investment but hear me out. I got a question last week asking what stocks
I would buy if I only had $1,000 a year to invest. The problem here is that even on a solid 8%
annual return, a grand a year is only going to grow to just over $100,000 over 30 years. That’s not a bad chunk of change but it’s
not going to help you retire. Instead, if you don’t have much to invest,
you need to start looking for investments that will make your money go further. So remember, one of the criteria for these
investments was low startup costs and limited downside. You can literally start an online business
with a website for less than $3 a month. That’s how much it costs for hosting with
a special deal I negotiated with Blue Host. You might spend a little more on extras but
you can easily do it on $20 or less a month. For example, I spend fifteen-hundred a month
to run my four websites and this YouTube channel, all to produce over ten grand in income. So we’ve got a low-cost, limited risk business
idea that can make you many times that investment and we’re talking owning a website, selling
things online, publishing books, so many different business ideas here. We’ve got a lot of videos on different online
business ideas here on the channel. I’m going to link to a couple of those videos
in the description below. I’ll also share that link to the special
discount rate to get your website online and a free webinar I’m giving on starting a
YouTube channel. Click on the video to the right for my five
dividend stocks that will never let you down. Bull or bear market, these stocks will put
money in your pocket plus a safe return. Don’t forget to join the Let’s Talk Money
community by tapping that subscribe button and clicking the bell notification.

34 thoughts on “5 Low Risk Investments to Protect and Grow Your Money Fast

  1. Want to see those 5 dividend stocks that will NEVER let you down? Constant cash flow and safety 💰 https://youtu.be/huy7Ui5xg_s

  2. Could you make a video discussing the strategy/ study plan you used to prepare for the CFA exams and how it has benefited you. I am asking because I am currently studying for CFA level 1 for June 2020 and it would be helpful.

  3. I love investing in utilities in my dividend portfolio. Not guaranteed safety (think of PG&E in CA), but one of the safer investments out there. I am pretty conservative in my portfolio of 25 dividend companies (I was more aggressive decades ago when I started investing, but now I play it a lot safer). Thanks for the vid!

  4. Quality content Joseph! Thank you so so much. I am gonna sub for your live webinar and also start doing research into tax lien investing. I never knew that existed!

  5. When I worked for cable and my wife worked for insurance, I would tell her "we can cut off a customer if they don't pay, your customers can still start their car without insurance".

  6. County taxes kill me in January with my two houses I get hit with house insurance, auto insurance, and an incremental city tax all in January with a water bill to top it off in beginning of February.

  7. Excellent video, Joseph. Although I’ve had terrible results with CTL, I’ve received really nice 30% or better capital appreciation for stocks I only bought for the dividends, including SO, GIS, KIM, and O. SO has similar metrics to EXC. I did miss out on CAG though. Anyway, great content!

  8. VWIAX (Wellesley Income fund from Vanguard) gives a slow and steady ride It is a balanced fund that doesn't have major drops.

  9. Foreclosing on peoples home who cannot pay their taxes does not sound very ethical, in fact it seems like a real scumbag thing to do

  10. Hey Corporal.. fellow E4 here. ( 20 years ago lol) Semper Fi Dog :-).. thoughts on Dollar Tree? Steady climber. 4% dividend I believe. Everything in store is a dollar. Seriously.. Recession hits I’m thinking they will be a good bet.. people looking for bargains and cutting back.. still buying staples.. thoughts? Thanks 😬

  11. I just wanted to share with you that because of you I looked at my stocks this morning and it was up 95 percent.😇Thank you. I have followed every pick you have suggested. I got the EFT’S you talked about. I have 4 already. Are these more secure than just norm stocks. Thanks again.

  12. 🛑 Goodness gracious Marine. I always have to look at your videos more than once. Outstanding 👍🏾👍🏾

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