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The Safest and Most Productive Way to Invest


Many of us, particularly those who are members of younger generations, know that working hard for our entire adult lives won't get us rich. It seems you barely earn enough to sock money away in a retirement account in today’s world, let alone save anything.

That's where investing outside your retirement account comes in. However, you don't want to risk losing all your money on a bad bet, but you also don't want to build a portfolio that doesn't grow. How, then, can you invest your money in a way that's both safe and productive?

Key Investment Tips

  • Determine how much risk you're willing to take. A good way to help you figure this out, along with how much money you can afford to lose, is to measure it against your net worth—the greater your net worth, the more risk you can tolerate.

  • High-reward investments carry high risk and include options, futures, and collectibles. If you don't want that kind of uncertainty, avoid these investments.

  • Stick to mid-risk investments like real estate, mutual funds, high-income bonds, and large and small-cap stocks. These are productive investments that involve a moderate amount of exposure and are acceptable risks to most people.

  • Low-risk investments are very safe but don't bring much in the way of returns. You can invest in these if you're extremely risk-averse, but don't expect to make much.

  • Keep timing in mind. You might have €20,000 on-hand to invest right now, but if you only have a year before you need it for something else, you need to factor that into your decisions.

  • Diversify. Don't tie all your money up in one type of investment. The more diversified and balanced your portfolio is, the more it will work for you.

  • Find an adviser that the Bank of Lithuania has certified. That will help ensure you get the right mix of assets in your portfolio.

Risk vs. Reward

Investment is risky, but it does carry reward with it. The problem is that when you go for the biggest, quickest reward, you're taking a huge risk with your money. Sure, we would all love to find a magic investment that makes us tens of thousands of euros in a matter of days or weeks, but that's not going to happen.

For every investment that makes a few people rich quickly, whether it's in real estate, stock market, or otherwise, there are hundreds of thousands more that don't do that. There are also thousands of people losing a ton of money on those.

If, for you, that's an acceptable level of risk, then more power to you. For most people, though, the potential danger in such investments is too high.

You need to do three things before you start looking at potential investments: Be smart and realistic, understand that all investment involves some level of risk, and be prepared to take that risk.


Most of us average joes do best with a variety of long-term investments in a diversified portfolio, which means proper asset allocation, or finding a good mix of stocks, bonds, and cash.

In general, a well-diversified portfolio includes some high-risk, high-reward stocks but balances them out with safer investments like bonds. Mutual funds and ETFs are also excellent ways to invest your money in stocks and bonds safely. Real estate is a little riskier but can pay off, too.

You also want some liquid cash in your portfolio if the economy turns south and takes your investments with it.

Asset Allocation

What does good asset allocation look like in practice? It depends on your age, stage of life, and goals, but here's an example of a well-diversified portfolio:

  • 35 percent of domestic stocks

  • 20 percent foreign stocks

  • 20 percent real estate investment trusts (REITs)

  • ten percent liquid cash

  • Eight percent bonds

  • Seven percent of commodities like precious metals

Lithuanian stocks are expected to outperform the real estate market, and, in general, stocks tend to perform better than real estate.

Lithuania had a strong real estate market in 2019, especially rental properties. The real estate market across the Baltics is moderately strong, plus the condition of real estate markets in one part of the world has little effect on others. Because of that, it would be unwise to count out REITs.

Foreign stocks can provide returns from countries with strong economies and markets. They expose you to special risks, though, because you're less aware of what's happening that might affect foreign stocks than you are of what will affect yours.

Keeping liquid cash in your portfolio protects you against economic shocks that cause markets to crash. You can use that liquid cash to shore up your portfolio with cheaper investments and safe ones like bonds and commodities should the economy falter.

Bond yields in Lithuania aren't particularly great. Still, they are a safe place to stick your money when the market is too volatile or steadily falling, which is why you want them in your portfolio even though they don't have the greatest returns.

If You're New to Investing

Nobody wants to get taken for a ride, and there are a lot of scams out there. If you're new to investing, you probably don't want to create your entire portfolio yourself. You want someone with experience to help steer you clear of scammers and bad investments.

The Bank of Lithuania licenses investment advisers so that you can find a good one through them.

If you would rather do it yourself, find a good investment app like XM, HotForex, or Expert Option. There are others, too, but these DIY apps can get you on your way without having to work with an adviser.

Final Thoughts

Investing carries a lot of exposure, but it doesn't have to be the terrifying albatross that it appears to be. Suppose you assess your financial position correctly and create a well-diversified portfolio. In that case, you should have risky investments balanced out with safer investments, all of which will work together to produce decent returns for you.


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