I’ll start this article by stating, up front, a simple – yet uncommon – truth: There is no such thing as an investment that is completely safe.

Any time you attempt to earn more money with the money you already have, there is a risk. Granted, there are different degrees of risk, and risk is relative – what is risky to you may not be risky to your neighbor.

But risk does exist. Nevertheless, there are investments out there that are considerably less risky than many mainstream investment options and can mitigate risk to the point where you could invest “safely” and with a reasonable degree of confidence.

Here, I’ll give you a few safer investment options and discuss the pros and cons of each, plus talk about how you can get started building your investment scheme around these less-risky options.

Safest of the Safe: U.S. Treasurys

What makes a safe investment? Most of the time, it comes down to the stability – current and future – of the underlying asset. That means there are fewer investments that are safer than U.S. Treasury securities.

The U.S. government routinely sells three types of investment-grade instruments to raise money for the Treasury (hence their name: Treasurys). These securities act like bonds in that they offer a fixed return with a certain maturity and are:

• Treasury bills (T-bills): These have a maturity of less than one year. Most T-bills have maturities of a month, three months, six months, and 364 days.
• Treasury notes (T-notes): These have a maturity of two to 10 years and include a coupon payment (a periodic interest payment) every six months.
• Treasury bonds (T-bonds): These have maturities from 20 to 30 years and coupon payments every six months.

What makes these so safe? Each of these securities is backed by the full faith and credit of the United States, which is largely viewed as the most stable government and economy in the world. In other words, the potential for a default of the American government is so low that you are virtually assured of keeping your value.

Of course, there are drawbacks. Returns for Treasurys – even T-bonds – are noticeably lower than other assets. Plus, inflation can eat away at your buying power – and while this happens to other assets, other assets have higher returns that can make up for it.

Certificates of Deposit (CDs)

Another type of safe investment is a certificate of deposit. This asset gives you a fixed return with a certain maturity, just like a bond. Maturities range from one month to as long as fifteen years, and as the timeline increases, so does the risk (since your money is locked up for a longer period of time). The interest rate paid on your money – your return – also goes up, though, so there is a risk/reward balancing game that has to be considered.

The return for CDs aren’t great, and they’re not nearly as liquid as most other types of assets. With that being said, they are widely available, easy to use, and easy to understand – and mostly safe.

Municipal Bonds

Bonds in general tend to be less volatile (and less risky) than stocks, commodities, or currencies – as long as you choose the right type. Government bonds are the safest, and in this category fall municipal bonds.

Municipal bonds are sold by cities and local governments to raise money. They come in several flavors, but all of them offer some kind of return – typically through an interest rate paid on the principal – with a set maturity date. When the bond matures, you get your principal back, plus interest.

These bonds are considered pretty safe because cities do not default on their debt very often. Investment-grade municipal bonds (those BBB- or higher with Standard & Poor’s or Baa3 by Moody’s) have a historical default rate of 0.06% – compared to 2.09% for corporate investment-grade bonds. Returns aren’t great, but they can help preserve capital over time. Plus, most allow you to avoid paying taxes on your returns, which adds significantly to the overall return.

I-Bonds

I-bonds, or inflation-linked savings bonds, are bonds offered by the government that feature a variable interest rate instead of a fixed rate that is tied into inflation. This variable rate is calculated by taking a fixed, base rate and adding the inflation rate – which fluctuates. You can hold onto the bond until maturity, or you can redeem the bond at any time (although you face a penalty if you do so before five years).

I-bonds help hedge against inflation, which preserves your money’s buying power, but since you can redeem them at will, returns are lower. Plus, you’re limited to purchasing just $10,000 worth each year. But, if you purchase I-bonds when inflation is low, you could gain by redeeming your I-bonds if/when inflation rises.

There are other options available, but they typically either aren’t quite as safe as these (like money market accounts) or offer negligible returns (like traditional savings accounts). The four presented above truly are investment-grade assets that are as safe as they come.

When considering diversifying an investment portfolio, many investors consider the four main assets classes – equities, bonds, cash, and property – before other less traditional assets. Becoming more common, though, is diversification into precious metals. Most often this is into gold, but, with the gold price so high, increasingly silver is the metal of choice for the canny investor.

Just like gold, silver has qualities that make it a good store of value in times of economic and political uncertainty and a good hedge against inflation. As a natural resource, supplies are limited and will become more so over time. Unlike gold, silver has far more industrial uses as well as being seen as a metal in the production of jewelry and currency.

How to invest in silver

There are plenty of ways to invest in silver. Investors can buy physical silver in the form of bullion coins and bars, Exchange Traded Funds are becoming more popular, and then there are futures contracts and silver certificates. But an often overlooked method of investing in silver is to invest within one of the four traditional asset classes, and buy the shares of silver mining companies.

Doing so gives exposure to the silver price, without the need, inconvenience, and cost to store coins or bars, nor the complexities of dealing in futures, and without the hidden management fees incurred within an ETF structure.

But an investor has to remember that exposure to silver through the shares of silver mining companies is not a direct exposure to the price of silver. There are other factors that affect the price of equities, such as tax, legal considerations, exploration and mining costs (including wages and transportation) and so on.

So when deciding in which mining companies to invest, an investor should consider the type of mining company he wants to invest in, particularly with regard to the risk assumed in the investment.

Type of Silver Mining Companies

There are three basic types of mining company:

Conglomerates

These companies produce silver as a by-product of mining for other metals and minerals, such as gold, copper, or zinc. Silver is almost a secondary product, and as such these companies are less prone to be affected by the price of silver alone. Just like an investment portfolio that has been diversified, should the silver price collapse – or rise strongly – the value of a conglomerate will move less aggressively than a more focused investment into silver.

Conglomerates, then, do not offer an optimum equity investment into silver, but they do tend to be large, well-researched companies. This means that it is generally easy to gather information about such companies and conduct in-depth research. Because their products are diversified, there tends to be less price volatility, though this has the downside of usually lower returns.

Companies that fall into this category include the likes of Rio Tinto, BHP Billiton and Xstrata.

Junior Exploration Companies

At the other end of the risk scale are the junior exploration companies. These companies are small and often have high costs that build up rapidly as they hunt out silver deposits. Share prices are usually low compared to the conglomerates, because they don’t produce any silver. An investment into an exploration company is a speculative play on the speculative business of exploration: there is no guarantee that the company will strike a rich vein of silver before its capital runs out, but if it does then its value could skyrocket.

Often such companies are bought out by the larger conglomerates once they have struck silver. In this way the conglomerate does not incur high exploration costs.

Profits on the shares of junior exploration companies can be huge, but so too can losses. For this reason, most investors into this type of company will invest in the shares of several companies, thus diversifying risk while ‘hoping to hit the big one’.

Companies in this category include First Majestic Silver and Impact Silver.

Silver Specific Mining Companies

Sitting between the relative cautious risk of an investment into conglomerate mining companies, and the speculative risk of the exploration companies, lays the companies that are almost solely focused on silver mining.

Again the correlation to the silver price won’t be exact due to the outside factors on share prices as discussed above, but it will be far more akin than an investment into a conglomerate.

Increase the chances of investing well

Like any investment, the success of an investment decision will depend upon the research conducted prior to investing.

One of the attractions of investing into silver mining shares is the disconnect they display from the silver price on occasions. This predominantly is because of sentiment pro and anti- silver. When market sentiment falls against silver, silver mining shares will often fall further and faster in price than the underlying price of silver. A main reason for this is because of the relationship between the cost of mining and the value of silver mined: the more bearish the market is about the silver price, the tighter it will believe margins will become and the lower the earnings of miners will fall. When such sentiment reverses, the prices of silver mining companies often gain strongly, reversing the trend of under-performance versus the silver price into a period of out-performance.

When researching silver mining companies for investment opportunities, an investor should give consideration to the following factors;

• The quality and amount of proven silver reserves, including the cost of mining;
• Production forecasts;
• The quality and history of company management;
• Return on equity and assets;
• The company balance sheet (does it have a strong financial position, and good cash flow?)

In addition, other factors that will affect share prices of specific silver mining companies will be the exposure to political and environmental uncertainty, as well as labor relations.

The Final Call

Because of the factors discussed above, investing in silver mines is not the same as investing in the metal itself. But doing so does have certain advantages over storing bullion, particularly in cost and convenience. But buying shares of silver mining companies does offer a diversification of asset exposure within equities, and can also be used as part of the riskier portion of an investment portfolio.

Whatever the reasons for investing in silver miners, whether it be for speculation, hedging, or diversification, good solid research before an investment is made will increase the chances of spotting the next winner.

Always be aware that an investment in silver mining companies is not a pure play on silver, it is also a play on the company itself.

Markets trade almost twenty four hours a day. But as a busy person, you certainly can’t be tied to your desk. You have a family life, business meetings, and then there’s leisure time to fit in somewhere. But markets move, and won’t stand still while you’re out doing something that just won’t wait. Fortunately, with the advent of the mobile phone, iPhones, iPads, and other such devices, you can now stay in touch with your investments and trades anywhere you go.

There’s such a myriad of phone apps for the active trader that it’s hard to choose the right one for you. Do you want an app that gives information, or allows you to view stock charts, or to trade from anywhere, or to view your own personal portfolio of stocks? Perhaps you want to be connected to other investors around the world, exchanging news and views?

Whatever your personal requirements, there’s an app that will add value to your life as a stock trader. Here we look at eight exceptional apps that will help make your trading even more profitable.

Bloomberg

Anyone who uses Bloomberg knows what a powerful tool it is. If its news, views, stock prices, and charts that you want, then Bloomberg provides them. Available on the iPhone, iPad, Blackberry, and Android products, you can have access to real time data, portfolio tracking tools, news and charts when on the move. This app is invaluable to all serious traders.

Yahoo! Finance

Yahoo! Finance is the most used finance site on the web today. With real time data, charting capabilities, historic data that can be downloaded to excel spread sheets, as well as up –to-date news, analysis, and portfolio management tools, this app, like the Bloomberg app, is a must have for any trader wanting to keep up-to-date while on the move.

Pro Stock Ticker

If you would like an app that streams price information to you then the Android Stocks Tape Widget from Wavestock gives you a fully integrated ticker tape on your android screen. Stock prices from all the major markets around the world (and then some) are available, and you can set multiple stocks and indices to roll across your screen as if you were sat in front of the ticker tape at your desk. Just like a ticker tape, too, price changes are shown in multiple colours, so it’s easy to follow the current market trend.

ETrade Mobile Pro

You might not be an ETrade customer, but you can still use their mobile app, the ETrade Mobile Pro. Available on android, iPhone, iPad, and Blackberry. ETrade has over 4 million customer accounts, and around $190 billion of customer assets, so you would expect that its phone app should be something special. You won’t be disappointed.

This app allows you to track markets, read independent research reports, view CNBC market news and analysis, build stock charts, and (if an ETrade customer) place trades wherever you are. Another neat trick it gives is allows you to take a photo of a barcode and get details of the company associated with it, if available.

CNBC

If you like watchlists, then one of the best available is on the CNBC Real Time app, available for most mobile devices. This app allows you to customize a stock watchlist, getting real time quotes, and receive the top business stories of the day. With pre-market trade data, and over 150 video clips each day, you won’t be stuck for information with CNBC.

StockTwits

If you like stock trading sharing ideas and hearing the views of others, then this is a great app for you. For the iPhone, you will suddenly be connected with thousands of other users all wanting to hear your views and express theirs. Add in market news, charts, and videos then this app becomes a whole lot more than an investment blog. For android devices, StockTwits has its StockDroid app, which allows monitoring of portfolios, and easy addition of stock symbols, as well as news and charts.

TabletTrader

Ok, so this isn’t an app for phones, but if you have a tablet then this app is a great addition for the stock trader. You have electronic access to a range of asset classes, including stocks on markets around the world. Using real time data, you can build charts and trade instantaneously. The system searches for the best prices available and routes your order accordingly for best price execution. Trade and account monitoring is also dynamic and real time.

Stock Ticker Lite

If you want to know what the markets are doing at a glance, then this wallpaper for your mobile is a great addition. You see your stock quotes even when your phone is locked, and the app supports all major US indices and US stocks. If your outlook is a little more global, then you should consider the Stock Ticker Pro, which supports almost all stocks and indices, ETFs and mutual funds in the world. This app is available for MbiSoft Apps

All in all, there’s no need to be disconnected from the markets. With a tablet or iPhone, a Blackberry or an iPad, or any one of a host of other devices, you can stay in touch with your markets at the touch of a screen. And this, ultimately, means more freedom in your personal life and more control over your trading.

Trading in any stock market is fraught with potential for error, especially for investors who don’t have a cohesive strategy or an eye for analysis. Succeeding in the market means having a strategy, closely following indicators, and knowing how to analyze what goes on during an average trading day to give you every edge possible.

Here, I’ll help you formulate strategy, analyze stocks, and use key indicators and metrics to make more sense of the chaotic world that is the market.

Creating a Strategy

If you fail to plan, plan to fail – in stocks, in your career, and in life.

Each trader should have a strategy, or a roadmap to what he or she will do, when he or she will do it, and how he or she will do anything from cut losses to lock in profits. This strategy is primarily formed based off your goals and your risk tolerance. If you want to make as much money as possible, your strategy will probably be more aggressive than someone who wants to conserve the buying power of their money, or turn in a steady stream of income from dividend-paying stocks.

We’ll assume that you want to stick to stocks as your asset of choice. One way to begin your strategy is to ask yourself these questions:

• How much money do I want to make?
• How quickly do I want to make this money?
• Am I okay with the high risk that comes with an aggressive approach?
• What’s my timeline? I.e. Do I care to hold onto stocks for at least a year to avoid a higher tax rate? Or, do I not care about the tax implications and would rather trade daily?

Once you have these questions answered, you can look into specific strategies to get you where you need to go. Growth investing targets stocks that grow quickly, bring in loads of cash and income, and generally outperform their peers and the market. These carry more risk and many growth stocks do not pay dividends.

Value investing chooses good companies at reasonable prices. This approach focuses on stocks that are undervalued by the market, with low P/E ratios, a strong asset-to-liabilities ratio, and strong financial fundamentals.

A mixture of the two, what some call a hybrid investment strategy, gives you a balanced approach that may be to your liking.

Analyzing the Market

Once you have a strategy in place, you’ll need to analyze each stock that is a prospect. Using a stock screener is a great way to select the criteria you want (i.e. a specific P/E ratio, dividend yield, earnings per share number, market cap, etc.) and find all the stocks in an exchange that meet that criteria.

With each individual stock, there are a few metrics you should examine. (Note: I prefer using both fundamental analysis and technical analysis to get a full, well-rounded picture of a company.) Some key metrics include:

– Operations cash flow per share: The amount of cash that your company brings in, divided by the number of outstanding shares. Then, take this figure and divide it into the current stock price. You’re looking for single-digit numbers. Cash flow is a sign of financial strength that is less easily manipulated than earnings. Use operational cash flow for a better analysis of performance.

– Dividend yield: If you want a steady stream of income, use dividend yield to find stocks with strong dividends. The higher, the better.

– Price-to-book ratio: Take the stock’s price per share and divide by the company’s book value of equity. This gives you an approximation of the stock’s true value. A low P/B ratio could signify that the stock is undervalued – but it can also signify that there are problems with the company.

– Return on equity (ROE): The company’s net income for a year divided by the total amount of shareholder’s equity. This gives you an idea of how well a company is using its reinvested earnings to turn out additional earnings. Using ROE with P/B ratio is a good combination; when the two are in sync, that is a strong sign of value. A high ROE and low P/B ratio – one at or below 3.0 – could reveal that the company is undervalued but a good performer.

– Price-to-sales ratio: The P/S ratio takes the company’s market cap and divides it by the company’s most recent annual revenue. You can also divided the stock’s price per share by revenue per share. Smaller ratios, like those less than 1.0, are preferable, especially when paired with rising earnings and stock prices.

– Price/earnings to growth ratio: The PEG ratio helps you figure out how fairly valued a company is. It is calculated by taking the stock’s price and dividing it by a company’s earnings. Then, take that figure and divide by annual EPS growth. A PEG of 1 suggests that the stock is fairly valued; lower suggests a cheaper stock and higher suggests a more expensive one. This is best used with growth stocks.

– Earnings per share: EPS is a common metric that measures the profit of a company. To calculate EPS, take the company’s profit and subtract dividends from that figure. Then, take this number and divide it by the number of outstanding shares. EPS tells you how much money the company is earning per share of stock issued.

Useful Indicators and Tools

In addition to the metrics described above, you can use a few well-known indicators and tools to help you.

With technical analysis, you have many tools available to you to help you strictly analyze the price of a stock and its volume to identify trends, turning points, and other opportune times to trade. We’ll look at a few essentials:

On-Balance Volume (OBV)

This indicator helps you measure how volume fluctuates with a particular stock, relative to its price over a certain timeframe. The theory is that a rise in volume precedes a movement in price. OBV that goes up, then, could be a signal that the price is moving up. When OBV changes, a trend reversal could be at hand.

Moving Average Convergence Divergence (MACD)

This feature helps you determine momentum and trends in a stock’s price. MACD measures how far apart (or how close) two moving averages are. A moving average is just the average of a stock’s price over a certain period of trading days. A 10-day MA, for example, is the average price of the last 10 trading days. When the two MAs converge and cross, it typically signals a trend reversal.

Stochastic Oscillator

This indicator helps you determine momentum. It has a range from zero to 100; when the signal is above 80, it is a sign that the stock is overbought (or overvalued) and due for a pullback. When the signal is above 20, it is a sign that the stock could be oversold and due for a rise.

Relative Strength Index (RSI)

Along with an oscillator, the RSI can be used to clarify when a stock is overbought or oversold. Any rating above 70 suggests that the stock is overbought; anything below 30 suggests that the stock is oversold.

All of these indicators and more can be accessed via most online trading platforms or charting programs. Some features are only available if you subscribe to a program, so keep that in mind.

Above all, take time and make smart, informed choices. Have a method to the madness before moving forward with any trade. Using analysis can help you separate the winners from the also-rans and money losers.

It’s been a busy few weeks in the markets. We have had the Facebook IPO, which was disastrous. I have repeatedly mentioned I felt the $104bn valuation is ridiculous and totally unjustifiable on a company making $1bn a year. I would personally value it around $8/share. It appears the market seems to at least somewhat agree with me as it’s down over 30% from it’s initial IPO price.

Oil has been making multi-month lows. I have traded oil many times in the past via the ETF XES. If it gets much lower this trade will become increasingly attractive.

There’s still lots of fear regarding the Eurozone and Greece especially, this is clearly weighing on traders minds. This saga seems like it has been going on forever now. We need a resolution.

We also had the US jobs numbers out on Friday, which came in at 69,000 new jobs created, much lower than what the markets expected. This sent the markets tumbling. Things may be beginning to falter with the US economy, though I think it’s probably too early to tell.

All these factors have caused investors to flood into US Treasuries, with the 10 year note making records lows of under 1.5%.

We also saw the Dow Jones Industrial average drop to just above 12,000. We briefly entered correction territory. This is where the price moves more than 10% below the recent high. There has since been a bounce though.

I’ve also been busy reading posts in the personal finance blogosphere this week and come across some really good ones. Some of my favourite reads have been:

PT Money posts Financial Advice that No Longer Rings True

Mike from The Financial Blogger posts Do You Need Money To Make Money?

Jason Price from One Money Design posts What are Your Biggest Obstacles to Saving Money?

Peter from Bible Money Matters posts Can You Afford Your Lifestyle?

Pierre from Intelligent Speculator posts Teaching Your Kids To Become Great Investors,

Hank from Money Qanda posts good companies always make good investments

Amanda from MyDollarPlan posts How to Splurge on a Budget

Drew from MyDollarPlan JP Morgan Chase Lost $2 Billion… Is it a Big Deal?

A guest blogger on TheDigeratiLife posts about getting a financial education in your 20s.

Also thanks to thirtysixmonths.com and controlyourcash.com, nerdwallet.com

Have you read any interesting posts online recently in the personal finance space? I’d love to hear about them.