Investing your money doesn't have to mean buying stock in dotcoms or funding your cousin's start-up. Beginning investors can see financial gain by trying out low risk, low return investments.

Keeping your money under the mattress is supposed to be a safe bet; but what happens if your house burns down? In today's world of federally insured deposits and good short-term interest rates, you can't afford not to invest your savings in an interest-bearing account.

Investing defined

Investing is the act of committing your dollars to a specific purpose with the intention of gaining a financial return. In other words, investing is using your money to make more money. You can invest in stocks, bonds, real estate, or simply put money in a savings account at the bank.

Many people shy away from investing because it feels too risky. While it's true that beginning investors need to be selective in their choices, it's not true that all financial investments carry with them the possibility of large loss. Low-risk investments are relatively safe; they simply have lower potential returns compared to higher-risk investments.

Easy money

The primary benefit of investing is the return-or income-that you receive over time. If you put your life savings of $10,000 under your mattress, it will always be $10,000. But put that same $10,000 into a low-risk, low-return savings account earning a basic annual percentage yield of just 1 percent, and you'll have $10,100 at the end of a year. As long as you select investments that are FDIC-insured, that extra $100 comes to you with almost no risk. That's equivalent to finding a $100 bill on the ground, and about the same amount of effort on your part as bending down and picking it up.

How to begin

If you've never invested before, look at FDIC-insured bank deposits. The FDIC insures up to $100,000 of cash that you put with bank and thrift institutions. You won't earn huge returns, but you won't risk losing any money either. The lowest paying option is generally a standard savings account through a bank branch. Higher-return options include money market accounts, bank-issued Certificates of Deposit (CDs), and online savings accounts.

With a CD, you agree to leave your money invested for a specific time period. In return for this commitment, you'll earn a higher interest rate. If you go back on your commitment and withdraw your money early, you'll be assessed a small penalty.

Online banks pay competitive interest rates because they have lower overhead than their brick-and-mortar counterparts. The main drawback is that you can't walk into a branch to take out your money. Most online banks, however, provide ATM access, and allow you to wire-transfer money to other accounts.

If you want basic returns on your investments, lift up that mattress and dig out that cash. Even if you have to start small, sticking to a safe, long-term, low-return investment program is always a good idea.

Published on March 7, 2015