September 20, 2023

During times of excessive inflation charges and downward tendencies, buyers could really feel apprehensive. Nevertheless, there are low-risk funding that provide excessive yields, to assist shield your capital in unsure instances.

Investing nicely is about balancing threat and reward. The unprecedented challenges going through the world economic system have many savers trying to cut back their publicity to dangerous investments and transfer in direction of these with decrease threat.

Whereas it’s true that the quantity of return you may get depends upon how a lot threat (and losses) you’re prepared to simply accept, nice buyers make their dwelling by balancing these forces.

Whereas we are able to’t resolve for you the way a lot threat you’re prepared to take, we now have structured this information to provide you a spread of choices based mostly on zero, low or medium threat for long-term investments.

A few of these choices like selecting up a bonus for switching banks, or getting right into a higher-yield financial savings account carry zero threat. Different choices may take some further studying or planning in your half.

The Prime 15 Greatest Low-Danger Investments With The Highest Returns:

The place To Begin – Low Danger Investing

For anybody trying to begin investing, I like to recommend simply getting began small as a result of nothing results in studying quicker than motion. The best strategy to get began investing in a complete host of asset courses is thru a “robo-advisor”.

My private favourite is M1 Finance as a result of it’s low value and useless easy to make use of. They provide particular person shares, ETFs and provide the means to construct your individual customized portfolios.

  • Fee-free investing
  • Permits fractional shares in shares, ETFs
  • Small minimal funding: $100

My Favourite Low-Danger Funding Proper Now

Fractional Actual Property

One of many traditionally lowest threat/highest return asset courses is actual property. The issue has at all times been that it’s actually arduous to get began with small quantities of cash.

Lately, nice platforms like Fundrise have popped up and “democratized” access to real estate investments. This advancement makes real estate a very viable option for people looking for alternatives to the stock market.

With Fundrise, you can get started with a well-diversified portfolio of commercial and multi-family real estate with as little as $10.

  • Low minimum investment – $10
  • Diversified real estate portfolio
  • Portfolio Transparency

Long-Risk Investments that require zero risk-taking

Ok, maybe these aren’t actual investments, but consider them smart money moves to make more money and optimize your finances at a baseline.

1. Grab a Bank Bonus

If you have some extra money you won’t need for a while, you can occasionally earn some free cash with a bank bonus from one of the nation’s best banks. Most banks will offer a bonus as an incentive for you to sign up, and these bonuses can be worth several hundred dollars on their own.

Bank bonuses are sometimes regional, however, and can depend on the local banks in your area and the products they offer.

In exchange for your bank bonus, you may have to set up a direct deposit to your new account or use a bank-issued debit card for a certain number of transactions within the first few months.


Just remember to read through all the fine print to learn about any fees that might be levied and how you can avoid them.

By jumping through these hoops, you can usually earn a few hundred dollars for your efforts. Best of all, you won’t have to worry about losing a single cent of your deposit. And if you decide not to keep the account for the long haul, you can always close it once you earn the bonus and meet all of the bank’s requirements.

2. Trade-Up To A High-Interest Savings Account

Other than opening your account and depositing your money, this strategy requires almost no effort on your part, either. The best high yield savings accounts offer competitive interest rates without charging any fees. Currently the highest savings rate goes to:

  • Earn 4.81% APY*
  • No monthly maintenance fees
  • No minimum deposit
  • Access your funds 24/7

3. Open An Online Checking Account

Just like high yield savings accounts, online checking accounts let you earn small amounts of interest on the money you deposit. If you’re going to park your money in the bank anyway, you could surely appreciate earning some interest along the way. Best of all, many online checking accounts charge zero or minimal fees to get started.

If you want the utmost flexibility, it’s also important to seek out an account that doesn’t impose account minimums or deposit requirements. And if you want to withdraw money frequently, you’ll want to make sure you have access to local, no-fee ATMs as well.

4. Earn More Credit Card Rewards

Credit cards are not the devil. We all spend money, and when used properly, a credit card can help you earn cashback on your spending. By picking up a cash-back credit card, you earn “points” that translate into real money.

And in reality, the “rewards” you earn with some of the top cards are far more lucrative than anything you might earn with a Certificate of Deposit or online savings account.

With credit cards I currently earn:

  • 5% back on cable, internet, cell service, and at Amazon and Target
  • 3% back on dining and travel
  • 6% back at the grocery store
  • 2% back on gas

Here’s how these offers work:

Let’s say you picked up a Chase Sapphire Preferred® card and put your regular spending on it to earn the signup bonus. Once you spent $4,000 on your card in 90 days, you would earn 60,000 points worth $750 in travel ($600 in gift cards or cashback). If you spent that $4,000 on bills you would normally pay like groceries, daycare, or utilities, and paid your card off right away, this is the closest thing to “free money” you’ll ever find!

If you want to learn more about the easy money you can score with credit card rewards, check out our guide on the best cash-back credit cards.

Best Low-Risk Investment Options

These investment options carry a very small amount of risk overall. In turn, you won’t expect to make as much, but your money should be relatively safe and still earn yields.

5. Certificate of Deposit

No matter how hard you look, you won’t find an investment more boring than a Certificate of Deposit. With a Certificate of Deposit (CD), you deposit your money for a specific length of time in exchange for a guaranteed return no matter what happens to the interest rates during that time period.

Be sure and buy your CD with an FDIC-insured financial institution (up to $250k is insured). The longer the duration of the CD, the more interest the financial institution will pay.

For a quick low-risk turnaround, I recommend a CIT Bank 11-month No Penalty CD at 4.15%.

6. Cash Market Account

A cash market account is a mutual fund created for individuals who don’t wish to lose any of the principal of their funding. The fund additionally tries to pay out slightly little bit of curiosity as nicely to make parking your money with the fund worthwhile. The fund’s aim is to take care of a Web Asset Worth (NAV) of $1 per share.

These funds aren’t foolproof, however they do include a robust pedigree in defending the underlying worth of your money.

It’s attainable for the NAV to drop under $1, however it’s uncommon. You’ll be able to park money in a cash market fund utilizing an awesome dealer like TD Ameritrade, Ally Invest, and E*TRADE or with the identical banks that provide high-interest financial savings accounts.

When you could not earn numerous curiosity in your funding, you gained’t have to fret about dropping huge quantities of your principal or the day-to-day fluctuations available in the market.

7. Treasury Inflation-Protected Securities (TIPS)

The US Treasury has a number of varieties of bond investments so that you can select from.

One of many lowest dangers known as Treasury Inflation Safety Securities, or TIPS. These bonds include two strategies of development. The primary is a hard and fast rate of interest that doesn’t change for the size of the bond. The second is built-in inflation safety that’s assured by the federal government.

No matter price inflation grows in the course of the time you maintain the TIPS, your funding’s worth will rise with that inflation price.

For instance, you would possibly spend money on TIPS right this moment that solely comes with a 0.35% rate of interest. That’s lower than the certificates of deposit charges and even fundamental on-line financial savings accounts.

That isn’t very attractive till you understand that, if inflation grows 2% per yr for the size of the bond, then your funding worth will develop with that inflation and provide you with a a lot greater return in your funding.

TIPS could be bought individually or you possibly can spend money on a mutual fund that, in flip, invests in a basket of TIPS. The latter possibility makes managing your investments simpler whereas the previous offers you the flexibility to select and select with particular TIPS you need.

Wish to shield your portfolio from inflation? Buy TIPS by an awesome dealer like:

8. US Financial savings Bonds

US Financial savings Bonds are much like Treasury Inflation-Protected Securities as a result of they’re additionally backed by the US Federal authorities. The chance of default on this debt is microscopic which makes them a really steady funding.

There are two major varieties of US Financial savings Bonds: Sequence I and Sequence EE.

Sequence I bonds include two parts: a hard and fast rate of interest return and an adjustable inflation-linked return. They’re considerably much like TIPS as a result of they’ve the inflation adjustment as a part of the whole return. (You’ll be able to see the current rates on Series I Bonds here)

The fixed-rate by no means adjustments, however the inflation return price is adjusted each 6 months and may also be adverse (which might carry your whole return down, not up).

Sequence EE bonds simply have a hard and fast price of curiosity that’s added to the bond mechanically on the finish of every month (so that you don’t have to fret about reinvesting for compounding functions).

That equates to roughly a 3.5% return in your funding. Should you don’t maintain to maturity you’ll solely get the acknowledged rate of interest of the bond minus any early withdrawal charges.

One other bonus to look into: when you use EE bonds to pay for schooling, you would possibly be capable to exclude some or all the curiosity earned out of your taxes.

Trying to buy some Sequence I or Sequence EE Bonds? You are able to do that instantly by

9. Annuities

Annuities are a point of contention for some buyers as a result of shady monetary advisors have over-promoted them to people the place the annuity wasn’t the proper product for his or her monetary targets.

They don’t must be scary issues; annuities generally is a good possibility for sure buyers who need assistance stabilizing their portfolio over a protracted time frame.

Should you’re available in the market for an annuity, nonetheless, pay attention to the dangers and speak with a great monetary advisor first.

Annuities are advanced monetary devices with a lot of catches constructed into the contract. Earlier than you signal on the dotted line, it’s vital to know your annuity inside and outside.

There are a number of varieties of annuities, however on the finish of the day, buying an annuity is on par with making a commerce with an insurance coverage firm. They’re taking a lump sum of money from you.

In return, they’re supplying you with a acknowledged price of assured return. Typically that return is fastened (with a hard and fast annuity), typically that return is variable (with a variable annuity), and typically your return is dictated partly by how the inventory market does and provides you draw back safety (with an equity-indexed annuity).

In case you are getting a type of assured return, your threat is quite a bit decrease. In contrast to the backing of the Federal authorities, your annuity is backed by the insurance coverage firm that holds it (and maybe one other firm that additional insurers the annuity firm). Nonetheless, your cash is usually going to be very secure in these sophisticated merchandise.

10. Money Worth Life Insurance coverage

One other controversial funding is money worth life insurance coverage. This life insurance coverage product not solely pays out a loss of life profit to your beneficiaries while you die (like a time period life insurance coverage coverage) but additionally permits you to accrue worth with an funding portion in your funds.

Entire life insurance coverage and common life insurance coverage are each varieties of money worth life insurance coverage. Whereas time period life insurance coverage is by far a less expensive possibility, it solely covers your loss of life.

Probably the greatest perks of utilizing money worth life insurance coverage is that the accrued worth cannot solely be borrowed towards all through your life however isn’t hit with revenue tax.

Whereas money worth life insurance coverage isn’t for everybody, it’s a intelligent strategy to go some worth onto your heirs with out both facet being hit with revenue tax.

See our really helpful life insurance coverage firms.

Medium Danger Funding Choices

All of those choices carry extra of a median threat profile and are variations of conventional inventory/bond investing. You might wish to seek the advice of a monetary advisor when taking a look at these choices.

11. Crowdfunded Actual Property Investing

Should you like the thought of investing in actual property however shudder on the considered being a landlord or residence costs the place you reside are too costly, actual property crowdfunding might be the answer!

Actual property crowdfunding received widespread after Congress handed the 2012 Jobs Act, which basically allowed actual property buyers and builders to boost cash from the general public to fund their tasks.

Let’s say a developer has plans to construct a 200 unit condominium in Las Vegas. Up to now, he may solely elevate funds for this challenge from personal buyers in his community. As of late, nonetheless, he can listing his challenge on an actual property crowdfunding platform and anybody within the public can make investments!

Fundrise operates like Lending Membership, besides all the investments are geared towards actual property. They maintain dangers low and curiosity excessive by fastidiously vetting the tasks they spend money on.

  • Low minimal funding – $10
  • Diversified actual property portfolio
  • Portfolio Transparency

12. Dividend-Paying Shares and ETFs

One of many best methods to squeeze a bit extra return out of your inventory investments is just to focus on shares or mutual funds which have good dividend payouts.

If two shares carry out precisely the identical over a given time frame, however one has no dividend and the opposite pays out 3% per yr in dividends, then the latter inventory can be a better option.

With dividend inventory mutual funds, the fund firm targets shares that pay good dividends and does all the be just right for you.

13. Company Bonds

In contrast to U.S. Treasury bonds, company bonds are usually not backed by the federal government. As an alternative, a company bond is debt safety between an organization and buyers, backed by the company’s means to repay the funds with future income or use its property as collateral.

Since you’re taking on threat by investing in an organization, the returns on company bonds are greater than different varieties of bonds, irrespective of how creditable the corporate’s fame is. Whereas that’s reassuring sufficient for some buyers, when you’re on the lookout for really low-risk company investing, it’s best to take into account bond funds.

Bond funds come within the type of ETFs or mutual funds and assist to diversify your funding throughout a variety of bonds.

Robo advisors provide a great opportunity for investing in bond funds. If you’re looking to choose what types of funds to build into your portfolio but don’t want to deal with the hassle of constantly balancing your account and re-allocating funds, these might be best for you.


M1 Finance
Begin investing with as little as $100
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14. Municipal Bonds

When a authorities on the state or native degree must borrow cash, they don’t use a bank card. As an alternative, the federal government entity points a municipal bond. These bonds, also called munis, are exempt from Federal revenue tax, making them a sensible funding for people who find themselves making an attempt to reduce their publicity to taxes.

Taxes on Muni Bonds

Most states and native municipalities additionally exempt revenue tax on these bonds however speak to your accountant to verify they’re exempt in your particular state.

What makes municipal bonds so secure? Not solely do you keep away from revenue tax (which suggests a better return in comparison with an equally dangerous funding that’s taxed), however the chance of the borrower defaulting could be very low. There have been some monumental municipality bankruptcies lately, however that is very uncommon. Governments can at all times elevate taxes or subject new debt to repay previous debt, which makes holding a municipal bond a fairly secure guess.

You should buy particular person bonds or, higher but, spend money on a municipal bond mutual fund at brokers like:

15. Most well-liked Inventory

Including on to the dividend inventory theme is most popular inventory. Most well-liked inventory is a sort of inventory that firms subject that has each an fairness (inventory) portion and a debt portion (bond). Within the hierarchy of payouts to types of investments, most popular inventory sits between bond funds (which come first) and customary inventory dividends (which come final).

Most well-liked shares are usually not traded practically as closely as frequent inventory, however do have much less threat than the frequent inventory. It’s simply one other strategy to personal shares in an organization whereas getting dividend funds.

You’ll be able to monitor down most popular inventory investments at:

The Backside Line on Low Danger Investments

As you get nearer to retirement, it’s vital to cut back your threat as a lot as attainable. You don’t wish to begin dropping capital this late within the sport; since you will have a few years of retirement forward of you, you wish to protect your money.

The very best low-risk investments might help you do exactly that. By letting you earn nominal quantities of curiosity in your cash with little threat, you possibly can assist your nest egg sustain with inflation with out dropping your shirt. Simply keep in mind to learn the tremendous print and educate your self alongside the best way. And when you’re ever unsure over an funding services or products, communicate with a certified monetary advisor and ask as many questions as you possibly can.

Try a few of our particular person stockbroker opinions that will help you get a greater grasp on what is going to meet your funding wants:

FAQs on Low to Medium Danger Investments

What’s the lowest threat funding?

The bottom threat funding is usually a financial savings account at a financial institution or credit score union. Financial savings accounts are insured by the Federal Deposit Insurance coverage Company (FDIC) for banks or the National Credit Union Administration (NCUA) for credit score unions, so your cash is secure. Additionally they have very low minimal stability necessities and assist you to entry your cash at any time. Nevertheless, they sometimes have low rates of interest, so you could not earn some huge cash out of your investments.

What’s a medium threat funding?

Medium-risk investments are those who carry a reasonable degree of threat, and so they could supply the potential for greater returns than low-risk investments. Nevertheless, there may be additionally a better probability that you possibly can lose cash.

Some examples of medium-risk investments embody:

1. Mutual funds: These are funding automobiles that pool cash from a number of buyers and spend money on a diversified portfolio of shares, bonds, and different securities.

2. Trade-traded funds (ETFs): These are much like mutual funds, however they’re traded on inventory exchanges like particular person shares.

3. Company bonds: These are money owed issued by firms, and so they could supply greater rates of interest than authorities bonds. Nevertheless, they’re barely riskier as a result of they don’t seem to be backed by the federal government, and the corporate may default on its funds.

4. Particular person shares: Shopping for particular person shares carries extra threat than investing in mutual funds or ETFs since you are betting on the efficiency of a single firm moderately than a diversified portfolio.

Particular person shares can supply the potential for greater returns, however are additionally topic to market swings. In case you are investing in shares, take into account dividend shares as a stable possibility.

What investments have zero threat?

Some investments have zero threat, reminiscent of investing in a U.S. Treasury invoice or a certificates of deposit from a financial institution. These investments are assured by the federal authorities, so buyers are nearly assured to get their principal again plus curiosity.