Earning fixed returns by buying regular securities isn’t possible. These fluctuate all over the place, meaning you never know how much you’re going to make in a year. Sometimes it’ll be negative 7%, other times plus 20%.
The good news is that there are multiple options for earning fixed returns in today’s markets, thanks to various artificial products that promise a consistent income, regardless of the value of underlying assets.
Usually, large corporations, banks or governments offer these investment options, but there are alternatives, too, which we discuss below.
Certificate Of Deposit
Perhaps the most basic instrument is the certificate of deposit (CD). Banks and financial institutions offer these to savers who want to earn a fixed return on a specific sum of money.
The way it works is simple. You agree to give the bank some capital for a given period, and they promise to pay you back with interest on the agreed-upon date at a fixed rate. In other words, you get a predictable return on your money.
Another option is to use dividend stocks. Many companies pay shareholders fixed sums every month even when profits and the market are volatile. Note though that the income is steady, but not the share price. This number can fluctuate all over the place.
You can also explore taking out government and corporate bonds. Like CDs, these promise to pay a fixed sum, called a “coupon” at the end of the term. Bond values can change over time depending on supply, demand, and interest rates, but the actual amount you get paid at the end of the bond term remains the same.
Bonds are popular among people saving for pensions and retirement. Large investment firms use them regularly to smooth their returns and increase their total holdings. Unfortunately, the real return on bonds has been low for the past fifteen years because of low interest rates.
Crypto Fixed Returns
You might also consider using a crypto mining company for fixed returns. Here companies promise to pay you a fixed amount in every significant time period in exchange for tying up your coins with them. The system works similarly to a conventional financial institution, but with the extra security that crypto brings.
Real Estate Investment Trusts
You might also explore if there are any fixed real estate investment trusts (REITs) you could use. These often offer decent returns because the property market can generate substantial yields. Expected returns are lower than for variable REITs, but it can offer excellent peace of mind, knowing you are going to receive a fixed income every month that can support your lifestyle.
Finally, you might want to consider taking out an annuity. Insurance companies offer these products that provide you with a fixed income for life. The idea is to hand over money to them, usually a significant sum, and in exchange get them to pay you a sum of money based on what they think your savings are worth to them if they invest them.