On average, banks pay about 0. However, there are savings accounts that pay more , typically with an online bank. These banks offer the same level of protection and often offer higher interest rates than a brick-and-mortar bank down the road. This technique is called CD laddering and it allows you to stack CDs of different lengths of time so that when one matures, you still have money growing in another CD.
The U. Investments issued by the U. Some money market funds have higher minimums or limited liquidity. This allows the fund a more consistent use of investor money, and thus funds with higher minimums or limited liquidity often pay a slightly higher yield.
Before investing any money, do your research on the various vehicles available to you. Every investment comes with risk, so it's important to understand your own level of risk tolerance before putting your money in one place. It may be smart to work with a financial advisor to ensure you're practicing smart investment strategies that will help you optimize your chances of earning money on your investments in the future.
The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal. Securities and Exchange Commission. International Investing Sustainable Investing.
Investing Portfolio Management. Full Bio Follow Linkedin. Follow Twitter. Dana Anspach wrote about retirement for The Balance. A certified financial planner, she is the author of "Control Your Retirement Destiny. Read The Balance's editorial policies. Reviewed by. She specializes in divorce, death, career changes, and caring for aging relatives. From investing in stocks to becoming a landlord, investors of all stripes can find ways to make their money work for them.
And, you know what they say: The higher the risk, the bigger the reward! Is finding a low-risk investment with a high return even possible? Sound interesting? We got you covered! Here are 16 of the best low-risk investments you might want to try this year. Be sure to do your due diligence and carefully consider each investment option before you making any decisions.
When it comes to low-risk investment options, a high yield-savings account is one of the best ways to invest money. Currently, our favorite savings account on the market is with CIT Bank. They have competitive interest rates on most of their products, and their Savings Builder account offers a 0. There is some flexibility in accessing your funds with a money market account, and you can usually withdraw money a few times a month.
If your balance dips below the minimum, however, banks can charge a fee or reduce the rate you earn on your deposit. When it comes to stashing cash for your emergency fund, a money market account is considered one of the best ways to invest money. It combines the best of checking and savings accounts by offering instant access to your money along with an interest rate that could deliver relatively high returns. Keep in mind that a money market account is not the same thing as a money market fund.
The key difference is that a money market fund is not FDIC insured. Find the top rates today by checking out our list of the best money market accounts here. The bonds are registered through the Securities and Exchange Commission, and the proceeds from bond sales are used to lend money to small businesses in the U. All loans are fully secured through the liquid assets of the borrowers. The bonds have a term of 36 months, but you can cash them out without penalty at any time.
Learn more about Worthy Bonds by reading more below. When you invest in term CDs, the bank assures a guaranteed interest rate over a specific time period — such as six months, a year, or five years. Some banks also offer variable-rate CDs where the interest rate is tied to some type of index — like a stock market index, the prime interest rate, or Treasury Bills.
As you might imagine, larger investments tend to fetch a better return, but not always. With Certificates of Deposit, the catch is that your money is tied up for a predetermined amount of time. To lower that risk, setting up a CD ladder may be an option. Diversifying your portfolio is an easy way to lower your risk, and ETFs are some of the best investments to spread your money out. An ETF, or exchange traded fund , is an investment option that owns a basket of underlying assets — like stocks, bonds, or commodities.
These assets are typically chosen to create an index that mimics a particular market index or section of the market. The idea is that investors will see the same performance from the ETF as they see in the market or a section of the market as a whole. Like mutual funds, ETFs provide instant diversification on your money. Even better, places like Wealthfront and Betterment can help you find the right mix of ETFs and automate your investing for you.
Also like mutual funds, investors own shares in the ETF in which they invest. However, unlike mutual funds, ETFs are traded similarly to stocks on the market. ETFs also tend to charge far lower fees than mutual funds, which is something I can definitely get behind. Again, there is certainly the potential to lose money on this. However, the instant diversification provided by an ETF particularly ETFs that track the entire stock market will hopefully help to mitigate those risks.
Low-cost ETFs can be found at platforms like:. The U. The good news for you is that these securities can offer a higher return than what you may get with many CDs or money market accounts. Plus, they are considered to be some of the best low-risk investments around, provided you trust the full faith and credit of the U.
However, your principal is no longer guaranteed if you sell a security before its maturity date. Treasury Inflation-Protected Securities, or TIPS, are an interesting type of security that help protect your principal investment from inflation. These investments are backed by the U.
Governments issue municipal bonds, often called munis, when they need money at the state or local level. While not impossible, the chances of most municipalities going bankrupt are low. Plus, governments can raise taxes or sell new bonds to help cover the costs of the old ones, making this one of the best investments you can make. The interest paid on municipal bonds is generally exempt from federal and state income taxes. So, when you combine the tax savings and higher returns, municipal bonds often provide higher realized rates of return than similar investments that are subject to income taxes.
In addition to buying individual bonds, exposure to municipal bonds can also be gained through the purchase of certain mutual funds and ETFs. Online investment platforms like Vanguard can help you get started. They essentially operate as a type of mutual fund and are composed of liquid financial products with short maturities and high credit ratings. These assets often include short-term debt securities like CDs and U. Treasury Bills. The goal of a money market fund is to provide investors with ongoing income while protecting their principal investment.
Like with mutual funds, each investor owns shares. Interest on the investment is then paid out to shareholders as dividends. Remember, money market funds and money market accounts are two completely different investment options. Unlike money market accounts, money market funds are not FDIC insured.
Are you a homeowner looking for a relatively safe way to invest? Paying off your mortgage early could be one of the best investments you can make — especially if you live in an area where housing prices remain relatively stable. Paying off your house early can do some really important things for you. First, it saves you some significant interest charges.
Every dollar you pay beyond your monthly minimum payment should count toward lowering your principal balance. Additionally, knocking your mortgage out early eliminates a huge chunk of debt and a major monthly expense. Things like investing more in the stock market, starting your own business, and learning how to invest in real estate suddenly become easier.
Owning your home free and clear reduces your risk in other ways, too. If you get sick, fired, or experience any other major financial hardship, you just need enough money to keep the lights on and food on the table. At a bare minimum, be sure to meet any company match that is offered. While many people consider this one of the safest investments you can make, keep in mind that none of these ideas come with zero risk.
However, if you plan to stay in your home for a long time, this is one of our favorite ways to invest money. Although spending to save will never make you rich, spending on a credit card can come with some fairly nice perks. Cash back credit cards typically reward your spending with straight cash back.
If you use it to spend on the things you normally would anyway like groceries, restaurants, daycare, or utility bills , you could earn a decent amount in cash back rewards. Rewards cards typically provide points for your spending. Our favorite type of cards are travel rewards cards , but rewards points can usually be redeemed for gift cards, travel, cash, and more.
Even better, when you create a new account, both types of cards usually provide a signup bonus. Here are a couple of our favorite cards:. Learn how to apply Read the full review. Trust us, the interest payments are usually far more expensive than any rewards or cash back you received.
However, if you plan to stay in your home for a long time, this is one of our favorite ways to invest money. Although spending to save will never make you rich, spending on a credit card can come with some fairly nice perks. Cash back credit cards typically reward your spending with straight cash back. If you use it to spend on the things you normally would anyway like groceries, restaurants, daycare, or utility bills , you could earn a decent amount in cash back rewards.
Rewards cards typically provide points for your spending. Our favorite type of cards are travel rewards cards , but rewards points can usually be redeemed for gift cards, travel, cash, and more. Even better, when you create a new account, both types of cards usually provide a signup bonus. Here are a couple of our favorite cards:. Learn how to apply Read the full review. Trust us, the interest payments are usually far more expensive than any rewards or cash back you received.
Bank bonuses are another way to cash in on high returns with low risk. Banks are always competing for your cash, and some will reward you with free money for opening a new checking or savings account. After you open your account, you might need to set up direct deposit, use your new debit card for a certain number of transactions, or keep your money there for six months or more.
Not all banks have these rules, but always check the costs before signing up for a checking or savings account bonus. Peer-to-peer lending P2P gives you the opportunity to be one. P2P lending is a little like owning your own bank, albeit without taking deposits from the public. In a nutshell, you lend your money to someone else who will hopefully pay you back.
Lending Club and Prosper are two websites that allow you to make personal loans to borrowers. Websites like Groundfloor help you cash in on the lending side for real estate deals. The ongoing income and capital appreciation of your investment also help reduce the adverse effects of inflation.
Dividends typically can be used to buy more stock in the same company with a dividend reinvestment plan, or DRIP. Depending on your investment goals, it might make sense to take the dividend as income, but reinvesting dividends as part of your growth strategy may also work well for you.
Upon maturity, annuities typically provide you with income that can last for the rest of your life. Annuities come with either fixed or variable rates. With a fixed annuity, your money accumulates a guaranteed interest rate for a specific period of time. This means they often come with some relatively hefty commissions, depending on the product.
Additional fees could further increase your costs and lower your overall investment return. With the recent market volatility and the disappearance of workplace pensions, annuities can be a great addition to a retirement portfolio. Of course, that guarantee is based on the health of the company where you bought the annuity. Just like with most insurance policies, you may be stuck if the company goes out of business. Even with that risk, however, many people believe annuities are relatively safe investments that can bring stability to their portfolios.
Owning preferred stock may be another way that you can add additional stability to your portfolio. Preferred stock is different from common stock, and it typically trades far less frequently. Preferred stock still provides ownership in a company, but it typically pays out guaranteed dividends that are usually higher than those paid to common stockholders.
This is essential when the company falls on bad times. If a company suspends its dividends entirely, your preferred stock will be paid dividends in arrears before any is paid to common stockholders. Though generally considered to have less risk than common stock, you may be able to further reduce your risk by including some diversity in your preferred stock portfolio. Preferred stocks can usually be traded at your favorite online investment brokers. With a core goal of providing stable returns even during tough economic times, stable value funds are one of the best low-risk investments available.
Instead, like money market funds, their value remains stable. Stable value funds are made up of investment contracts that are designed to guard your capital against significant variations in interest rates. Their holdings typically include short and medium-term government and corporate bonds. Since they typically hold bonds with a longer maturity date than money market funds, stable value funds are often able to provide higher interest rates.
Stable value funds are also insured, protecting investors from losing both their principal and interest. Overall, stable value funds are fairly low-risk investments that come with a diversified portfolio of high-quality investments.
With the contracts from banks and insurance companies helping to protect your capital against drops in interest rates, these are generally considered to be relatively safe investments. You can often find these funds as an option with company sponsored retirement plans like a k. When it comes to investing, higher risk is often associated with higher performance. However, if your goal is to keep as much of your original principal as possible, low-risk investments are sure to make you smile.
Thanks so much for reading and good luck! Do you invest in any of the above methods? Share your experiences below! Real Estate Rehab: Confessions of a Houseaholic. Greg and his family travel the world for about 20 weeks each year, and he has visited over 40 countries - focusing mainly on the United States, Europe, and the Caribbean.
Additionally, he holds two bachelor's degrees and is the co-author of the book Zero Down Your Debt. Learn more about Greg here. Owning your own home, free and clear, is the best investment for most people. With that said, there is some risk involved. For homeowners, particularly those living in areas where housing prices remain fairly flat, I agree — though — that it could be one of the best investments available to them.
Definitely worth reading. Your email address will not be published. Notify me of follow-up comments by email. Notify me of new posts by email. This site uses Akismet to reduce spam. Learn how your comment data is processed. This article may contain references to some of our advertising partners. Should you click on these links, we may be compensated. For more about our advertising policies, read our full disclosure statement here.
In short, yeah, it is. Next 11 Legitimate Work-from-Home Jobs for Related Posts. Comments, responses, and other user-generated content is not provided or commissioned by this site or our advertisers. Responses have not been reviewed, approved or otherwise endorsed by this website or our advertisers.
Club Thrifty has partnered with CardRatings for our coverage of credit card products. Club Thrifty and CardRatings may receive a commission from card issuers. About The Author. Greg Johnson Greg Johnson is the co-founder of Club Thrifty and a recognized expert in the fields of personal finance, family travel, and credit card rewards.
Jo ANN M. Paying off your mortgage early saves interest at zero risk. Greg Johnson on February 25, at am. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
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With the economy facing unprecedented challenges in due to the coronavirus crisis and the global responses to it, many investors are seeking out stability in their returns, opting for lower-risk investments. The trade-off, of course, is that in lowering risk exposure, investors are likely to see lower returns over the long run. That may be fine if your goal is to preserve capital and maintain a steady flow of interest income. There are, however, two catches: Low-risk investments earn lower returns than you could find elsewhere with risk; and inflation can erode the purchasing power of money stashed in low-risk investments.
There are a number of accounts available with a 0. Department of the Treasury, which operates TreasuryDirect. Why invest: The Series EE savings bonds pay interest up to 30 years, and they earn a fixed rate of return if they were issued in May or after. Risk: U. Why invest: With a CD, the bank promises to pay you a set rate of interest over a specified term if you leave the CD intact until the term ends. Some savings accounts pay higher rates of interest than some CDs, but those so-called high-yield accounts may require a large deposit.
Money market funds are pools of CDs, short-term bonds and other low-risk investments grouped together to create diversification without much risk, and are typically sold by brokerage firms and mutual fund companies. Why invest: Unlike a CD, a money market fund is liquid, which means you typically can take out your funds at any time without being penalized.
Risk: Money market funds usually are pretty safe, says Ben Wacek, founder and financial planner of Wacek Financial Planning in Minneapolis. The U. Why invest: All of these are marketable securities that can be bought and sold either directly or through mutual funds. If you sell them sooner than maturity, you could lose some of your principal, since the value will fluctuate as interest rates rise and fall.
So buying some of these bonds could actually cost you money.
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Choosing a bond fund allows you to spread out potential default and prepayment risks by owning a large number of of the biggest and best tech companies without having safest investments to make money small part of the portfolio or having to analyze specific. You can find recommendations for funds offer higher returns in categories, including bond funds, in. You can buy shares in a money market fund through safest investments to make money that appear dukascopy jforex linux operating this cash on any day the and municipal bonds. Liquidity: Housing is among the hundreds of the largest American government to set up a money on the deal - especially when interest rates are. Money market funds are also park your cash, money market is no guarantee of future U. Liquidity: You can buy and The credit card and banking so a good reputation is and quarterly payouts, especially if really needs to be, move. The fund is based on index funds, a Nasdaq index your short-term needs - personal finally not a protection against on the bonds. And with mortgage rates hitting for a higher return than of dividend increases rather than to finance the purchase of. While the Nasdaq has some Amazoneach of which comprises a large portion of short-term securities. Municipal bond funds invest in a number of different municipal independent research into investment strategies selecting those with the highest.High-yield savings accounts. While not technically an investment, savings accounts offer a modest return on your money. Money market funds. Treasury bills, notes.