low risk
The safest investments retain their value, are easily convertible to cash, and are not volatile. But no risk, no reward: They offer lower returns and may not appreciate as well as more speculative investments.
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  • The safest investments retain their value, are easily convertible to cash, and are not volatile.
  • Low-risk investments include CDs, US Treasuries, money market funds, AAA-rated corporate bonds, blue-chip stocks, and fixed annuities.
  • Safe investments do typically pay lower returns, and their value may erode over time.
  • Visit Insider’s Investing Reference library for more stories.

When it comes to investing, nothing is 100% safe. That’s why it’s called investing, as opposed to saving – which is basically parking your money in an account so it’ll keep its value.

Investing means you’re putting money into something – a financial asset of some sort – in the hopes of getting a return. Where there’s the chance of a gain, there’s always going to be the chance of a loss, too. Risk and reward are two sides of the same investing coin. 

That said, not all investments are created equal, risk-wise. Some investments come with extraordinarily low odds that you’ll lose your money. 

There’s no single definition or magic number to define “low-risk,” but low-risk investments do share some traits. They tend to be non-volatile – no big price swings – and they tend to be liquid – that is, easily sold and turned into cash. 

Here are seven investments that can be considered safe: That is, they will almost always return to you what you put in. Plus some return as well. 

Certificates of deposit (CDs)

 What they are: CDs are offered by banks or credit unions; they're technically a type of temporary deposit account. They offer a fixed rate of interest in exchange for keeping your funds in the account for a certain amount of time - generally, six months to five years. Usually, the longer the term, the higher the annual percentage yield (APY).



Why they're safe: Federally insured banks rarely go out of business. Even if they did, as bank products, CDs are covered by FDIC insurance, up to $250,000 per account-holder.

US Treasuries

What they are: Issued by the Dept. of the Treasury, US Treasury bonds are like a loan you make to the US government: You buy the bond (or the note or the bill, as the shorter-term loans are called) and the government promises to pay you back later, with interest. Over the past 10 years, annual interest rates for 10-year Treasuries, a benchmark for other loans, have ranged between 0.5% and 3.7% - not the highest rate of return, but definitely the safest (see below). 

Why they're safe: Treasuries are backed by the "full faith and credit" of the US government. In its 245-year history, that government has never defaulted on a debt, making US Treasury bonds the closest thing to a risk-free investment out there. In fact, they often act as a safety comparison for other investments.

Money market funds

What they are: Money market funds are a type of mutual fund that invests in short-term debt instruments and pays out earnings in dividends. A typical annual return is between 1% and 2%. 

Why they're safe: The short-term debt assets that money market funds hold tend to be very low-risk themselves, like CDs and US Treasuries. They are very liquid and come from sound issuers. 

AAA-rated corporate bonds

What they are: Corporate bonds are debt instruments used by companies to raise money. Investors buy the bond, essentially loaning money to the issuing company, and then receive regular interest payments. When the bond matures, the company pays back the principal. Corporate bonds receive letter grades from independent credit rating agencies; these ratings reflect the financial soundness and credit history of the issuing company. 

Why they're safe: The AAA rating is the highest grade a company and its debt can receive. Companies rated AAA by credit rating agencies have been judged to have an extremely high capacity to meet their financial obligations - so it's unlikely they'll default on the bond's interest payments or fail to repay the principal. AAA-rated corporate bonds are considered only slightly riskier than US Treasuries. 

Blue-chip stocks

What they are: Blue chips are stocks from large, well-established, and well-endowed corporate giants like Apple, Bank of America, Coca-Cola, Johnson & Johnson, Starbucks, and Visa. They are considered the lowest-risk of equities.

Why they're safe: As stocks, blue chips rank higher on the risk spectrum than bonds, but not by much. These companies have "made it" - they have long histories of success and are often leaders in their fields. They pay dividends steadily, and their shares hold their value; both tend to move gently but steadily up. No guarantees, of course - there have been blue chips that crashed and burned in the past - but it's more likely that at worst, a blue chip will stagnate, rather than decline, in value.

ETFs with bond or blue-chip portfolios 

What they are: Exchange-traded funds are publicly traded securities that hold a basket of similar assets, often designed to track an index of a particular type of asset. There's an ETF for just about every asset in the investment universe, and that includes low-risk ones. like Treasuries, AAA corporate bonds, and blue-chip stocks. 

Why they're safe: Diversification by its nature lessens risk: It's the old safety-in-numbers principle. ETFs that purchase a portfolio of other low-risk assets, like bonds, are particularly low risk. Economical, too: Buying just a few shares of an ETF gives you exposure to dozens of bonds or stocks.

Fixed-rate annuities

What they are: Annuities are an insurance product, technically a contract with an insurer. You invest a sum with an insurance company now, and they pay your principal back to you with interest in a series of payments later - for a set period, or even as long as you live. There are different types of annuities, but fixed-rate annuities - which pay the same, set amount of interest - are among the lowest-risk.

Why they're safe: Dierdre Woodruff, senior vice president and secretary at Canvas Annuity, notes that you're guaranteed to get your money back, with a predictable interest rate. It's part of your arrangement with the insurance company. They are obligated to make those payments at the set rate. "As long as the policyholder leaves their money in the contract for the entire term, they can calculate exactly what their return will be at the end of the term," says Woodruff.

Of course, there's always the risk the insurance company will fail (and no, there's no FDIC insurance that covers your funds). 

Drawbacks of safe investments

Playing it safe can have drawbacks, too. Here are some downsides to low-risk investments.

Low returns

Low-risk investments protect you on the downside, but often don't offer much on the upside. And the safer they are, the less they pay. Citing from Ibbotson Associates, Robert R. Johnson, professor of finance at Creighton University's Heider College of Business, notes that Treasury bills only returned 3.3% annually between 1926 and 2019. In contrast, large cap stocks returned 10.2%. 

And you do lose something with safe investments: the opportunity for higher returns - from another investment.

Inflation risk

Another downside to low-risk investments, especially those paying fixed interest rates, is inflation risk - the risk that rising prices will eat into the principal or the returns of your investment. That's one reason why longer-term CDs and bonds pay higher interest than shorter ones - the increased risk from inflation. 

That's why time matters. If an investor's time horizon is short, low-risk investments with low yields can work. But over a long term, low-risk investments that pay returns lower than inflation end up losing their value.


Although liquidity is a component of low-risk investments, many of them do lock up your money. CDs often charge fees if you want to cash out before the term ends. Annuities can come with steep penalties for taking your money out early, especially after payments begin. Rosen suggests that this illiquidity puts them slightly higher on the risk spectrum.

The financial takeaway

Any investment has some risk. But if you invest in the low-risk assets above, you'll almost always get back what you put in - and usually more. 

Although every portfolio can use some of the safety they offer, they're best for very conservative investors who want to access their money in the short term. 

Just be aware that low-risk also typically means low yield. In the long-term, if they don't keep up with inflation, these can actually cost you money. 

Investors with longer investment horizons are probably better off accepting some risk of loss in order to hedge against the risk of inflation. 

Related Coverage in Investing:

Bonds vs. CDs: The key differences and how to decide which income-producing option is better for you

What is liquidity? It's how easily you can sell an asset for cash - here's when and why it matters to your finances

What is the money market? A financial exchange where companies trade loans, and investors can earn interest on their savings

What are junk bonds? A risky yet high-yield investment that can bring rewards if you're willing to take the chance

What is a large-cap stock? It represents a $10 billion-plus company - and often low-risk, stable returns for investors

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