10 Best Low-Risk Investments Right Now (2024)

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Whether you’re new to markets or a seasoned pro, low-risk investments are a great option for conservative investors who want to protect their money from potential losses while still benefiting from modest growth.

It’s important to understand that while investing in low-risk assets can preserve your capital, it also limits your returns. Benefits of low-risk investing include additional diversification, and it’s especially helpful for people who are saving money for near-term financial goals like a home down payment.

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Low Risk Investments

1. U.S. Treasury Bills, Notes and Bonds

  • Risk level: Very low
  • Potential returns: Low to moderate, depending on maturity

U.S. Treasury securities are backed by the full faith and credit of the U.S. government. Historically, the U.S. has always paid its debts, which helps to ensure that Treasurys are the lowest-risk investments you can own.

There are a wide variety of maturities available. Treasury bills, also referred to T-bills, have maturities of four, eight, 13, 26 and 52 weeks. They are sold at a discount to their face value, and your return is the difference between the purchase price and par value at redemption.

Treasury notes come in maturities of two and ten years. Treasury bonds have long maturities of 20 to 30 years, which means they carry slightly more risk than shorter-duration Treasury securities. Both bonds and notes make interest payments every six months.

The market for U.S. Treasurys is the largest, most liquid market in the world, making them easy to sell if you need access to your cash before the maturity date.

2. Series I Savings Bonds

  • Risk level: Very low
  • Potential returns: Depends on the rate of inflation

I bonds are a special type of U.S. savings bond with a variable interest rate designed to keep up with inflation, as measured by the consumer price index (CPI).

They offer returns based on two interest rates: A fixed rate that remains the same for the 30-year term of the bond, plus a variable interest rate that is updated every six months to match the prevailing rate of inflation.

In addition, I bonds benefit from semiannual compounding: Earned interest is added to the value of the bond twice a year, gradually increasing the principal on which you earn interest. You must hold the bond for at least one year before cashing out, and there is a small penalty if you cash out before five years have passed.

If you live in a place with high taxes, I bonds are a good option since their interest payments are exempt from both state and local taxes.

3. Treasury Inflation-Protected Securities (TIPS)

  • Risk level: Very low
  • Potential returns: Depends on the rate of inflation

Treasury inflation-protected securities (TIPS) are issued by the U.S. Treasury, and like I bonds they use a special mechanism to ensure that returns keep up with the rate of inflation. TIPS offer maturities of five, 10 or 30 years.

Most bonds promise to return your original investment—the so-called principal—plus a fixed or variable amount of interest. TIPS offer a fixed rate of interest, but their principal value increases or decreases in line with the prevailing rate of inflation as measured by CPI.

At maturity, if the principal is higher than your original investment, you keep the increased amount. If the principal is equal to or lower than your principal investment, you get the original amount back. TIPS pay interest every six months, based on the adjusted principal.

4. Fixed Annuities

  • Risk level: Very low
  • Potential returns: Modest

Fixed annuities are a popular type of annuity contract that are frequently used for retirement planning, but can also be useful for medium-term financial goals. Sold byinsurance companies and financial services companies, a fixed annuity guarantees a fixed rate of return over a set period of time, regardless of market conditions.

There are two stages in the life of an annuity: the accumulation phase and the payout phase. In the first, you make a series of payments into your annuity and earn interest that grows the value of your account tax deferred. The payout phase may be either a single, lump-sum payment or a series of regular payments over time.

Although inflation can erode the value of a fixed annuity, many companies offer cost-of-living-adjustment (COLA) riders that help the value of your annuity keep up with rising prices.

5. High-Yield Savings Accounts

  • Risk level: Very low
  • Potential returns: The best high-yield savings accounts can offer moderate returns, depending on prevailing interest rates

High-yield savings accounts offer an unbeatable combination of a modest return on your money, unlimited liquidity—you can withdraw money whenever you wish—plus the backing of the Federal Deposit Insurance Corp. (FDIC), which insures deposits up to a set limit.

With next to no risk of losing money plus the possibility of modest returns (depending on prevailing rates), parking your emergency fund or cash you need for near-term purchases in a high-yield savings account makes a lot of sense.

The interest rates offered by high-yield savings accounts can vary widely depending on market conditions. But you’ll never lose money on your principal and earned interest.

6. Certificates of Deposit (CDs)

  • Risk level: Very low
  • Potential returns: The best CDs may offer returns that match or beat high-yield savings accounts

These time deposit accounts allow you to invest your money at a set rate for a fixed period of time. Withdrawing the money prior to your maturity date will trigger an early withdrawal penalty fee.

There are different types of CDs—like regular, bump-up, step-up, high-yield, jumbo, no-penalty and IRA CDs, for example—and different financial institutions will have different rules and fees. Certificates of deposit are insured by the FDIC up to statutory limits, which makes them a very low-risk investment option.

7. Money Market Mutual Funds

  • Risk level: Low
  • Potential returns: Modest

Money market mutual funds invest in various fixed-income securities with short maturities and very low credit risks. They tend to pay a modest amount of interest, but unlike other kinds of mutual funds there’s very little chance to make money from appreciation.

This type of investment offers plenty of liquidity, and because of the types of investments they make, they are considered to be very safe with very little risk of losing money. But unlike savings accounts or CDs, they are not backed by the FDIC.

Money market mutual funds are best used as a parking place for cash that you might want to keep easily accessible for a big purchase or another investment opportunity.

8. Investment-Grade Corporate Bonds

  • Risk level: Moderate
  • Potential returns: Modest to high

Corporate bonds are fixed-income securities issued by public companies. When a public company has a very good credit rating, their bonds are investment grade—also called high grade—which means the company is very likely to keep paying interest over the life of the bond and return the principal at maturity.

Credit rating agencies like Moody’s, Standard & Poor’s and Fitch assign credit ratings to companies after doing in-depth research on their finances and stability. But just because a bond is considered investment grade today is no guarantee that a company won’t get into trouble tomorrow and see their credit rating downgraded. That’s why this type of investment carries more risk than the others noted above.

9. Preferred Stocks

  • Risk Level: Moderate
  • Potential returns: Modest to high

Preferred stocks combine the characteristics of stocks and bonds in one security—providing investors with dependable income payments plus the potential for shares to appreciate over time.

Shares of preferred stock are issued with a set face value, and income from preferred stock gets preferential tax treatment, as qualified dividends tend to be taxed at a lower rate than bond interest.

Although common stock dividends are reduced or eliminated before preferred stock dividends, in the case of company profit loss, preferred stock dividends may also be lowered or eliminated.

10. Dividend Aristocrats

  • Risk level: Moderate
  • Potential returns: Moderate to High

Many public companies pay dividends, but the dividend aristocrats are special. These companies have demonstrated remarkable long-term stability and reliability in their dividend payouts.

A public company is considered to be a dividend aristocrat after having increased their annual dividend payments for a minimum of 25 years in a row. There are other qualifications—included in the S&P 500 index, have a minimum market capitalization of $3 billion—but what matters for investors is that these companies have maintained good dividend yields over the long term.

Owning shares of a public company can be more risky than other options on this list, but the dividend aristocrats can also provide you with dependable cash flow no matter what the stock market is doing—plus the chance of appreciation over time.

What is Risk?

Risk within the context of investing is the potential for your investments to lose all of their money or simply achieve lower returns than you anticipated or hoped for.

Risk tolerance is your personal comfort with uncertainty. The greater your risk tolerance, the more you’re willing to bet that an investment will pay off and the more you’re willing to lose if you bet wrong. In investing, higher risks generally mean higher rewards.

If you can’t afford to lose any money, then you must have a low risk tolerance. Even if you can afford to lose money on an investment, if your personal temperament means that you will cash out investments at a loss during times of market volatility in spite of an investment strategy designed for long-term growth, then a conservative investment strategy may be right for you.

Considerations for Low-Risk Investors

Understand Your Risk Tolerance

Although each of the investments listed above is considered low risk, there is still a sliding scale of risk associated within them.

Plopping your money into a certificate of deposit that guarantees a specific rate of return will be much lower-risk than entering the world of the dividend aristocrats.

In other words, even a “low-risk” investor should spend some time considering just how much “risk” they can tolerate, and pick an investment accordingly.

Know Your Time Horizon

Knowing when you want to access your money—your investing time horizon—is also essential when it comes to investing.

Certain certificates of deposit charge fees for withdrawing your money before the maturity date, for example, while money that’s in a high-yield savings account is yours pretty much at the click of a button or ATM visit.

Use your plans for this money—monthly income, home down payment in five years, retirement income, etc.—to also help dictate where you decide to invest.

Frequently Asked Questions (FAQs)

What is low-risk investing?

Low-risk investing involves buying assets that have a low probability of incurring losses. While you’re less likely to see losses with a low-risk investment, you’re also less likely to earn a significant return.

Examples of low-risk investing include buying treasury securities, corporate bonds, money market mutual funds, fixed annuities, preferred stocks, common stocks that pay dividends and index funds

Why own low-risk investments?

Low-risk investments can be a safe way to grow your money more quickly than you would with a traditional savings account—especially in a low interest rate environment—without worrying about the potential for the potential losses that may come with riskier options.

If you’re trying to max out your potential for growth, low-risk investments likely aren’t for you.

When should you buy low-risk investments?

Low-risk investments are best for people who want to grow their money more quickly than a traditional savings account interest rate offers, but who also want to avoid the potential for large losses.

When the Federal Reserve lowers key interest rates, for example, banks may follow suit by dropping their average savings accounts rates. In this environment, low-risk investments can earn higher returns than a savings account without taking on too much risk.

What is risk management?

Risk management is the process of determining potential risks associated with individual investments, portfolios and lifetime financial management strategies. Regardless of your personal risk tolerance, you must periodically evaluate your individual and big-picture financial decisions to ensure that they align with your values and goals.

Are there high-yield low-risk investments?

Low-risk investments aren’t likely to offer high-yield results. By definition, a low-risk investment usually offers higher returns than traditional bank deposits, but it involves less risk than other investment opportunities. Less risk usually means less chance for high growth.

There are opportunities for more growth within low-risk investments, depending on your tolerance for risk, but overall, any investment that is considered low-risk will net you less in returns than a higher risk investment opportunity.

10 Best Low-Risk Investments Right Now (2024)

FAQs

What is the safest investment right now? ›

  • Treasury Inflation-Protected Securities (TIPS) ...
  • Fixed Annuities. ...
  • High-Yield Savings Accounts. ...
  • Certificates of Deposit (CDs) Risk level: Very low. ...
  • Money Market Mutual Funds. Risk level: Low. ...
  • Investment-Grade Corporate Bonds. Risk level: Moderate. ...
  • Preferred Stocks. Risk Level: Moderate. ...
  • Dividend Aristocrats. Risk level: Moderate.
Mar 21, 2024

Which investment gives the highest return with low risk? ›

Best Low-Risk Investments With High Returns
  • High-Interest Savings Account. ...
  • Annuities. ...
  • Money Market Mutual Fund. ...
  • Municipal Bonds. ...
  • Certificate of Deposits. ...
  • Debt-focused Unit Linked Insurance Plans (ULIPs) ...
  • Treasury Bills. ...
  • Fixed Deposits.
Jan 29, 2024

What is the absolute best investment right now? ›

11 best investments right now
  • High-yield savings accounts.
  • Certificates of deposit (CDs)
  • Bonds.
  • Money market funds.
  • Mutual funds.
  • Index Funds.
  • Exchange-traded funds.
  • Stocks.
Mar 19, 2024

Is there a 100% safe investment? ›

What Is a Safe Investment? U.S. government Treasury bonds are considered 100% safe because their returns are predictable and guaranteed.

How to get 10% return on investment? ›

Investments That Can Potentially Return 10% or More
  1. Stocks.
  2. Real Estate.
  3. Private Credit.
  4. Junk Bonds.
  5. Index Funds.
  6. Buying a Business.
  7. High-End Art or Other Collectables.
Sep 17, 2023

Where can I get 12% interest on my money? ›

Where can I find a 12% interest savings account?
Bank nameAccount nameAPY
Khan Bank365-day, 18-month and 24-month Ordinary Term Savings Account12.3% to 12.8%
Khan Bank12-month, 18-month and 24-month Online Term Deposit Account12.4% to 12.9%
YieldN/AUp to 12%
Crypto.comCrypto.com EarnUp to 14.5%
6 more rows
Jun 1, 2023

What is the safest investment with the highest return? ›

The concept of the "safest investment" can vary depending on individual perspectives and economic contexts, but generally, cash and government bonds, particularly U.S. Treasury securities, are often considered among the safest investment options available. This is because there is minimal risk of loss.

How to get 12 percent return on investment? ›

How To Get 12% Returns On Investment
  1. Stock Market (Dividend Stocks) Dividend stocks are shares of companies that regularly pay a portion of their profits to shareholders. ...
  2. Real Estate Investment Trusts (REITs) ...
  3. P2P Investing Platforms. ...
  4. High-Yield Bonds. ...
  5. Rental Property Investment. ...
  6. Way Forward.
Jul 20, 2023

How do I get a safe 5% return? ›

Money market and T-bill funds

Government-issued treasury bills and short-term corporate borrowings are an ideal way to capture the best rates today. That's why T-bill and money market exchange-traded funds have yields these days at or just a bit higher than 5 per cent.

How can I get 5% return on my money? ›

High-yield savings accounts

Another place you could park money and earn 5% or more, without risking your principal within applicable insurance limits, is a high-yield savings account. High-yield savings accounts can also let you move money in and out of your account more freely than CDs do.

What investment has the highest return? ›

Key Takeaways
  • The U.S. stock market is considered to offer the highest investment returns over time.
  • Higher returns, however, come with higher risk.
  • Stock prices typically are more volatile than bond prices.
  • Stock prices over shorter time periods are more volatile than stock prices over longer time periods.

Where is the best place to invest $1,000 right now? ›

Put it in an IRA

If you're wondering how to invest $1,000, putting your money in a retirement account offers one of the highest potential returns. You can opt for a workplace retirement account or open an IRA on your own with an online broker.

Which stock will boom in 2024? ›

Performance List of Multibagger Penny Stocks for 2024
NameBook Value1 Year (%)
J Taparia Projects₹ 18.56345.61%
Rasi Electrodes₹ 9.4552.90%
3P Land Holdings₹ 37.7524.68%
SAL Steel₹ 4.87110.65%
6 more rows
7 days ago

What are the top 10 stocks to buy right now? ›

Sign up for Kiplinger's Free E-Newsletters
Company (ticker)Analysts' consensus recommendation scoreAnalysts' consensus recommendation
Amazon.com (AMZN)1.30Strong Buy
Microsoft (MSFT)1.32Strong Buy
Delta Air Lines (DAL)1.35Strong Buy
Nvidia (NVDA)1.38Strong Buy
15 more rows

Where is the safest place to invest $100,000? ›

Types of assets to invest in
  • Property. On the assumption that you are looking to invest for income then buy-to-let is one option. ...
  • Cash. Although a lot of people think of cash as the starting place when looking to invest for income it can be the eventual destination. ...
  • Peer-to-Peer lending. ...
  • Equities. ...
  • Bonds.
Apr 22, 2024

What is the safest and best way to invest $100000? ›

Best Investments for Your $100,000
  • Index Funds, Mutual Funds and ETFs.
  • Individual Company Stocks.
  • Real Estate.
  • Savings Accounts, MMAs and CDs.
  • Pay Down Your Debt.
  • Create an Emergency Fund.
  • Account for the Capital Gains Tax.
  • Employ Diversification in Your Portfolio.
Dec 14, 2023

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