The 10 Best Safe And Low-Risk Investments

Investing can be risky.

Risky investments sometimes lead to big profits, but many people end up losing a lot of money.

However, there are also many low-risk investment options that can help you grow your savings slowly but safely.

At the very least, they are much better than leaving your money sitting in an account with no interest.

Here are ten safe and low-risk investment options to consider.

1. High-yield savings accounts

A high-yield savings account is the safest investment you can find that still offers a modest return.

A savings account is basically just like a bank account, except with a higher interest rate. Many banks and financial institutions offer these types of accounts.

The best thing about a high-yield savings account is that the risk is practically zero since the deposit is insured by the government (up to $250,000 in the US).

You can get an online savings account with 1.25% annual interest from Ally Invest. That’s about as good as it gets for an investment with no risk these days.

Your bank may also have some options for you that are better than letting your money get eaten away by inflation in a checking account. Try calling them today and asking if they offer a savings account with a decent interest rate.

2. Certificates of deposit

A certificate of deposit (CD) functions like a high-yield savings account in many ways, except your money is “locked in” for a specific length of time.

With a CD, the bank pays you a guaranteed interest rate in exchange for keeping your money in the account the entire time.

Certificates of deposit tend to be categorized based on the length of time that your money is locked in for:

  • 3-Month CD
  • 6-Month CD
  • 12-Month CD
  • 18-Month CD
  • 24-month CD

Usually, the longer you are willing to keep your money in there, the higher the interest rate will be.

If you want to invest in a CD, you should start by calling your bank to ask if they have CD accounts and what rates they offer.

If you have a stock brokerage account, then you may also be able to invest in a CD through them. TD Ameritrade is a stock broker that allows you to invest directly in CDs from different providers.

Same as with savings accounts, deposits into CDs are insured by the government, so they have practically no risk.

But if you withdraw your money early, then you may get a penalty. You will lose some of your returns and may even have to pay an additional fee.

So, make sure to read the rules carefully before deciding to invest in a CD and be completely sure that you won’t need to withdraw your money early.

3. Paying off debts

These days, interest rates globally are at all-time lows. They are close to 0% in many of the world’s biggest economies, including the US, Europe, and Japan.

Unfortunately, this has also caused interest rates on most safe and low-risk investments to go down.

That’s why you can’t expect more than a 1-2% return on investments that are absolutely zero risk (high-yield savings accounts and certificates of deposit).

However, the rates on some types of debt are still extremely high. In fact, the rates on credit card debt have not budged — they are still over 15% on average!

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