{"id":17030,"date":"2025-06-20T22:45:19","date_gmt":"2025-06-20T22:45:19","guid":{"rendered":"https:\/\/finderica.com\/?p=17030"},"modified":"2025-06-20T22:45:19","modified_gmt":"2025-06-20T22:45:19","slug":"safe-investments-for-people-who-hate-risking-their-money","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=17030","title":{"rendered":"Safe Investments for People Who Hate Risking Their Money"},"content":{"rendered":"\n
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\"ScoreCard<\/p>\n

Do the volatile ups and downs of the stock market make your stomach churn? Does the thought of buying a fixer-up to flip give you pause? Do you break out in a nervous sweat whenever someone suggests getting into crypto?<\/p>\n

If you answered yes to any of these questions, you probably have a low risk tolerance. You worry more about losing money than missing out on the opportunity to make more of it.<\/p>\n

Being cautious about how you invest your money is a good thing. But if you\u2019re so risk-averse that you avoid investing altogether, you\u2019re putting your money at greater risk than you think.<\/p>\n

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Can You Survive 10 Days of Budgeting?<\/h3>\n

If you need to wrangle your budget, it may be time to consider a savings challenge. Our\u00a010-Day Savings Challenge<\/a>\u00a0will teach you how to make your money work for you with a high-yield savings account, stop overpaying on Amazon, earn money for trying out apps or watching movie previews and more.<\/p>\n

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Do Safe Investments Actually Exist?<\/h2>\n

When you think about the risks of investing, you probably think about losing principal, i.e., the original amount you invested. If you keep your money in a savings account, there\u2019s virtually no chance of that happening because deposits of up to $250,000 are insured by the Federal Deposit Insurance Corporation (FDIC).<\/p>\n

But consider that savings accounts, on average, pay just 0.13% APY. Then you have a year like 2022, when inflation hit 8.5%.<\/p>\n

So while you\u2019re not at risk of losing principal by stashing your funds in savings accounts, you could still lose purchasing power. In personal finance, purchasing power risk means that your money will lose value if it doesn\u2019t earn enough to keep up with inflation. Say inflation had continued at 8.5%, buying $100 worth of groceries would have costed you $108.50 a year later. If you\u2019re saving over decades toward retirement, you\u2019ll be able to buy a whole lot less groceries in your golden years.<\/p>\n

There\u2019s also the risk of missed opportunity. By playing it too safe, you\u2019re unlikely to earn the returns you need to generate income and grow your savings into a sufficient nest egg.<\/p>\n

Though there\u2019s no such thing as a risk-free investment (all investing involves risk!), there are plenty of safe ways to invest your money.<\/p>\n

The 8 Best Low-Risk Investments<\/h2>\n

Here are eight options that are good for conservative investors. (Spoiler: Gold, bitcoin and SS Reader stocks did not make our list.)<\/p>\n

1. CDs<\/h3>\n

If you have cash you won\u2019t need for a while, investing in a CD, or certificate of deposit, is a good way to earn more interest than you\u2019d get with a regular savings account.<\/p>\n

You get a fixed interest rate as long as you don\u2019t withdraw your money before the maturity date. Typically, the longer the duration, the higher the interest rate.<\/p>\n

Since they\u2019re FDIC insured, CDs are among the safest investments in existence. But low risk translates to low rewards. Those low interest rates for borrowers translate to lower APYs for money we save at a bank. Even for five-year CDs, the best APYs are just over 1%.<\/p>\n

You also risk losing your interest and even some principal if you need to withdraw money early. In comparison, you can withdraw money from a savings account without fear of penalty.<\/p>\n

If CDs sound a little too illiquid for your cash needs, a high-yield savings account may be the better move. Some of the best high-interest savings accounts offer an interest rate at 1.00% or more \u2014 and you can access that cash when you need it. You can also see if your preferred bank or credit union offers money market accounts, which might have an even better APY than a high-yield savings account.<\/p>\n

2. Money Market Funds<\/h3>\n

Not to be confused with a money market account, money market funds are actually mutual funds that invest in low-risk, short-term debts, such as CDs and U.S. Treasurys. (More on those shortly.)<\/p>\n

The returns are often on par with CD interest rates. One advantage: It\u2019s a liquid investment, which means you can cash out at any time. But because they aren\u2019t FDIC insured, they can technically lose principal, though they\u2019re considered extraordinarily safe.<\/p>\n

3. Treasury Inflation Protected Securities (TIPS)<\/h3>\n

The U.S. government finances its debt by issuing Treasurys. When you buy Treasury bonds, you\u2019re investing in treasury bonds backed by the \u201cfull faith and credit of the U.S. government.\u201d Unless the federal government defaults on its debt for the first time in history, investors get paid.<\/p>\n

The price of that safety: pathetically low yields that often don\u2019t keep up with inflation.<\/p>\n

TIPS offer built-in inflation protection \u2014 as the name \u201cTreasury Inflation Protected Securities\u201d implies. Available in five-, 10- and 30-year increments, their principal is adjusted based on changes to the Consumer Price Index. The twice-a-year interest payments are adjusted accordingly, as well.<\/p>\n

If your principal is $1,000 and the CPI showed inflation of 3%, your new principal is $1,030, and your interest payment is based on the adjusted amount.<\/p>\n

On the flip side, if there\u2019s deflation, your principal is adjusted downward.<\/p>\n

If the risk of deflation has you worried about investing in TIPS, there\u2019s nothing wrong with investing in treasury bonds, treasury notes, and savings bonds. Treasury bonds mature in 30 years and are relatively low yield, but they are pretty much a sure thing. If you can\u2019t afford to have your funds tied up for too long, you can also consider treasury bills. Some treasury bills can mature in just a few days.<\/p>\n

4. Municipal Bonds<\/h3>\n

Municipal bonds, or \u201cmunis,\u201d are bonds issued by a state or local government. They\u2019re popular with retirees because the income they generate is tax-free at the federal level. Sometimes when you buy muni bonds in your state, the state doesn\u2019t tax them either.<\/p>\n

There are two basic types of munis: General obligation bonds, which are issued for general public works projects, and revenue bonds, which are backed by specific projects, like a hospital or toll road.<\/p>\n

General obligation bonds have the lowest risk because the issuing government pledges to raise taxes if necessary to make sure bondholders get paid. With revenue bonds, bondholders get paid from the income generated by the project, so there\u2019s a higher risk of default.<\/p>\n

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5. Investment-Grade Bonds<\/h3>\n

Bonds issued by corporations (called corporate bonds) are inherently riskier than bonds issued by governments, because even a stable corporation is at higher risk of defaulting on its debt. But you can mitigate the risks by choosing investment-grade bonds, which are issued by corporations with good to excellent credit ratings.<\/p>\n

Because investment-grade corporate bonds are low risk, the yields are low compared to higher-risk \u201cjunk bonds.\u201d That\u2019s because corporations with low credit ratings have to pay investors more to compensate them for the extra risk.<\/p>\n

6. Target-Date Funds<\/h3>\n

When you compare bonds vs. stocks, bonds are generally safer, while stocks offer more growth. That\u2019s why as a general rule, your retirement portfolio starts out mostly invested in stocks and then gradually allocates more to bonds.<\/p>\n

Target-date funds make that reallocation automatic. They\u2019re commonly found in 401(k)s, IRAs and 529 plans. You choose the date that\u2019s closest to the year you plan to retire or send your child to college. Then the fund gradually shifts more toward safer investments, like bonds and money market funds, as that date gets nearer.<\/p>\n

7. Total Market ETFs<\/h3>\n

While having a small percentage of your money in super low-risk investments like CDs,\u00a0money market funds and Treasurys is OK, there really is no avoiding the stock market if\u00a0you want your money to grow.<\/p>\n

A total stock market exchange-traded fund (ETF) will invest you in hundreds or thousands of companies. Usually, they reflect the makeup of a major stock index, like the Wilshire 5000. If the stock market is up 5%, you\u2019d expect your investment to be up by roughly the same amount. Same goes for if the market drops 5%.<\/p>\n

By investing in a huge range of companies, you get an instantly diversified portfolio, which is far less risky than picking your own stocks.<\/p>\n

You can even invest in bond mutual funds \u2014 even lower risk than other mutual funds because it invests solely in bonds.<\/p>\n

If you\u2019re playing day trader, the stock market is a risky place. But when you\u2019re committed to investing in stocks for the long haul, you\u2019re way less exposed to risk. While downturns can cause you to lose money in the short term, the stock market historically ticks upward over time.<\/p>\n

8. Dividend Stocks<\/h3>\n

If you opt to invest in individual companies, sticking with dividend-paying stock is a smart move. When a company\u2019s board of directors votes to approve a dividend, they\u2019re redistributing part of the profit back to investors.<\/p>\n

Dividends are commonly offered by companies that are stable and have a track record of earning a profit. Younger companies are less likely to pay dividends because they need to reinvest their profits. They have more growth potential, but they\u2019re also a higher risk because they\u2019re less established.<\/p>\n

The best part: Many companies allow shareholders to automatically reinvest their dividends, which means even more compound returns.<\/p>\n

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Drowning in Expenses?<\/h3>\n

Maybe you\u2019re scrambling after your car broke down. Or you got a medical bill you weren\u2019t expecting. Or inflation has finally pushed your budget over the edge. Take a breath. You don\u2019t need to go it alone.<\/p>\n

When money is tight, these resources<\/a> can help you manage unexpected expenses without stress.<\/p>\n<\/div>\n

Pros and Cons of Safe Investments<\/h2>\n

Safe investments might be good for your blood pressure, and they inherently keep your money (mostly) protected, but they also come with some downsides. When prioritizing safe investments, you\u2019ve got to be willing to take the good with the bad. Here\u2019s what that looks like:<\/p>\n

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Pros<\/span>\n <\/p>\n