If you’re looking for ways to grow your money while keeping risk to a minimum, you’re not alone. Many investors seek low-risk options that provide reliable returns without exposing them to too much volatility. Whether you’re nearing retirement or simply prefer a more cautious approach to investing, there are several smart ways to invest without risking your financial security. In this article, we’ll explore some of the best low-risk investments for 2025 that offer good returns with minimal risk.
What Are Low-Risk Investments?
Low-risk investments are those that are less likely to lose value, typically offering steady returns over time. They are ideal for those looking to preserve capital while still earning a modest return. These investments are generally less volatile than stocks, making them a good choice for conservative investors or those who need their funds to remain stable.
While no investment is completely risk-free, low-risk options can provide peace of mind and help build a balanced portfolio. Let’s dive into the best options available for you to consider this year.
1. High-Yield Savings Accounts
One of the safest and simplest ways to earn interest on your money is through high-yield savings accounts. These accounts typically offer higher interest rates than traditional savings accounts, and your funds are insured by the FDIC, making them a secure choice. While the returns may not be huge, they’re perfect for short-term goals or emergency savings.
For instance, CIT Bank’s Savings Builder account offers an impressive 1.00% APY with no monthly service fees, making it one of the best options for those looking for a reliable and low-risk place to park their money.
2. Money Market Accounts
Money market accounts are another solid choice for low-risk investments. They often offer better interest rates than regular savings accounts and are FDIC insured. With a money market account, you can access your funds when needed, making it a flexible option for your emergency fund.
Keep in mind that while money market accounts are low-risk, they typically require higher minimum balances than regular savings accounts, so make sure to shop around for the best rates.
3. Fully Secured Bonds
Fully secured bonds are an attractive low-risk investment option. These bonds are backed by collateral, which reduces the risk of loss. Worthy Bonds, for example, offer a 5% fixed interest rate and are used to fund small businesses. The bonds are secured by the businesses’ assets, which provides an added layer of protection for your investment. With a low minimum investment of just $10 per bond, they offer an accessible way to earn steady returns.
4. Certificates of Deposit (CDs)
Certificates of deposit (CDs) are a popular low-risk investment for those looking to grow their savings at a guaranteed rate. With a fixed interest rate for a specific term, CDs are FDIC-insured, ensuring the safety of your principal up to $250,000. They typically offer higher returns than traditional savings accounts, but your money is tied up for the duration of the term, which could range from a few months to several years.
The longer the term, the higher the interest rate, so consider using a CD ladder strategy to give you access to your money at different intervals without sacrificing potential returns.
5. Exchange-Traded Funds (ETFs) – Medium Risk
While not entirely low-risk, ETFs can be a relatively safe investment option when chosen wisely. ETFs provide instant diversification by holding a variety of assets, such as stocks or bonds. By spreading your investment across different sectors, you can lower the overall risk. ETFs are also more liquid than mutual funds, and they generally have lower fees. However, as with any investment, there’s still some risk involved.
6. U.S. Treasury Securities
U.S. Treasury securities, including T-bills and Treasury notes, are some of the safest investments available. These government-backed securities are considered almost risk-free because they are backed by the full faith and credit of the U.S. government. Treasury Inflation-Protected Securities (TIPS) are particularly valuable for protecting your principal from inflation, as their value is adjusted based on inflation rates.
7. Municipal Bonds
Municipal bonds, issued by state or local governments, are another safe investment option. They are usually low-risk, and the interest income is often exempt from federal and state taxes. Although the return may be modest, municipal bonds can be a great way to preserve your capital while generating tax-free income.
8. Money Market Funds
Money market funds are investment products that focus on short-term debt securities, like Treasury bills and commercial paper. They’re designed to maintain a stable value, usually $1 per share, and provide income through dividends. While not FDIC insured, money market funds are regulated by the SEC and offer a low-risk alternative to other investment vehicles.
9. Pay Off Your Mortgage Early
If you own a home, paying off your mortgage early can be one of the best low-risk investments you can make. By paying down your mortgage faster, you save on interest and eliminate a significant debt. This gives you financial freedom and peace of mind. Additionally, the money you would have spent on mortgage payments can be redirected to other investments once the mortgage is paid off.
10. Credit Card Rewards
Credit card rewards might not seem like an investment, but they can provide significant value with minimal risk. Many credit cards offer sign-up bonuses, cash back, and rewards points. If used responsibly, credit cards can be a way to earn rewards on everyday purchases without any added risk. Just make sure to pay off your balance in full each month to avoid high interest charges.
11. Bank Bonuses
Some banks offer generous bonuses for opening new accounts, often in the range of $100 to $500. These bonuses are a great way to earn free money with minimal effort. Typically, you’ll need to meet certain requirements, like setting up direct deposit or maintaining a minimum balance. The best part is that these accounts are insured by the FDIC, so your money is safe.
12. Peer-to-Peer Lending
Peer-to-peer (P2P) lending allows you to lend money directly to individuals or businesses through online platforms. While this can be a lucrative investment, it’s important to understand the risks involved. However, platforms like LendingClub and Prosper allow you to diversify your loans, reducing the risk of any one loan defaulting.
13. Dividend-Paying Stocks – Medium Risk
Dividend-paying stocks offer both regular income through dividends and potential capital appreciation. While they carry more risk than bonds or savings accounts, they can be a good option for those looking for stable returns. Reinvesting your dividends can help you grow your portfolio over time while providing ongoing income.
14. Annuities
Annuities are insurance products that provide guaranteed income, often for the rest of your life. Fixed annuities provide a set return, making them a stable investment option for those seeking predictability. While the returns may not be as high as other investments, the certainty they provide can be valuable, especially for retirees.
15. Preferred Stocks – Medium Risk
Preferred stocks offer higher dividends than common stocks and are less volatile. They provide a good balance between risk and reward, offering steady income while retaining some growth potential. However, they are still subject to market fluctuations, so they’re best suited for those with a medium risk tolerance.
16. Stable Value Funds
Stable value funds are low-risk investments often available in retirement plans like 401(k)s. These funds are designed to preserve capital while providing moderate returns. They hold short- to medium-term government and corporate bonds and are typically insured, making them a safe and stable investment option.
Final Thoughts
When it comes to investing, it’s important to find the right balance between risk and reward. While high-risk investments can yield higher returns, low-risk investments provide stability and peace of mind. Whether you’re building an emergency fund, saving for a big purchase, or just looking for safe ways to grow your wealth, the options listed above offer low-risk solutions with decent returns. Be sure to assess your financial goals and risk tolerance before making any investment decisions, and always consider diversifying your portfolio to minimize risk.
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