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11 Best Low-Risk Investments for 2024

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Inside Creative House / Getty Images

Fact checked by Marcus ReevesReviewed by Thomas J. CatalanoFact checked by Marcus ReevesReviewed by Thomas J. Catalano

In today’s unpredictable markets, many investors allocate a portion of their portfolio to safer, more stable assets. While high-risk investments may offer greater potential returns, they also carry a higher chance of losing the principal. For those looking to generate reasonable returns with less uncertainty, here are the 11 best low-risk investments for 2024.

Key Takeaways

  • Safe assets are those that allow investors to preserve capital without a high risk of potential losses.
  • Such assets include Treasurys, CDs, money market funds, and annuities.
  • There is a risk-return tradeoff, and safer assets typically offer comparatively lower expected returns.
  • Experts recommend maintaining a diversified portfolio that includes a mix of low, moderate, and high-risk investment options.
  • This approach helps balance the potential for growth with stability, ensuring you can weather market volatility while achieving your financial goals.

The Risk-Reward Tradeoff

All investments involve a natural trade-off between risk and potential returns. Generally, assets with higher return potential also carry greater risk, while low-risk investments like CDs and Treasurys provide stable but modest returns.

In general, younger investors with longer time horizons can take on more risk, knowing they have time to recover from periodic downturns in volatile assets. Older investors nearing retirement may shift toward more low-risk securities to preserve capital.

Experts typically recommend a diversified portfolio containing a mix of low, moderate, and high-risk assets tailored to your goals, timeline, and risk tolerance. Some higher-risk assets allow for growth potential, while maintaining a core of stable investments hedges against volatility. Meanwhile, a safety net of some low-risk investments can ensure you’ll be able to ride out rough patches or generate needed income in older age.


Finding the right balance comes down to your specific situation and risk tolerance. Be sure to thoroughly assess your goals, timeline, as well as psychological and emotional ability to handle swings in portfolio value. And don’t forget to diversify across asset classes to avoid overexposure to any one type of risk.


While cash isn’t on our list, we should begin here so you have a baseline to compare the other investments below. Cash and on-demand cash deposits are the epitome of safety in the asset world. There’s virtually no risk of loss (unless it is lost or stolen), making it a very reliable asset. However, its safety comes at a cost: it generally yields minimal returns, especially when inflation runs high, reducing its purchasing power.

Cash is ideal for immediate or short-term financial needs due to its liquidity. It’s perfect for maintaining an emergency fund or paying for immediate and upcoming expenses. Indeed, the most significant benefit of holding cash is that it is instantly accessible and universally accepted.

11 Best Low-Risk Investments for 2024

Investment Class Safety Liquidity Upside Potential
Preferred stock Moderate Moderate Moderate-High
High-Yield Savings High High Low
Money Market Funds High High Low
CDs High Low Low
Treasurys Very High High Low
TIPS High High Low
Investment Grade Corporate Bonds Moderate Moderate Moderate
Bond Funds Moderate High Low-Moderate
Municipal Bonds Moderate Moderate Low-Moderate
Annuities High Low Low
Cash-Value Life Insurance High Low Moderate

1) Preferred Stock

Preferred stocks are a type of hybrid security that combines features of both stocks and bonds. They offer a fixed dividend, which is typically higher than the dividends paid on common stocks, and have a higher claim on assets if there’s a liquidation.

However, preferred stocks generally do not come with voting rights, limiting shareholders’ influence on corporate decisions. These securities are ideal for investors seeking stable income with less risk than common stocks but more potential returns than bonds. Preferred stocks are often issued by financial institutions and large corporations to raise capital without diluting voting power. They can be traded on stock exchanges, providing a level of liquidity like common stocks.

Why invest: Higher dividends than common stocks and bonds, priority in dividends and liquidation, potential tax advantages.
Risk of investing: Interest rate sensitivity, call risk, credit risk.
Safety: Moderate (higher than common stocks, lower than bonds).
Liquidity: Moderate to high (traded on stock exchanges but may have lower volumes).

2) High-Yield Savings

High-yield savings accounts offer a low-risk bank account option, but with higher interest rates than regular savings accounts. Online banks that have lower overhead expenses compared with traditional brick-and-mortar banks are often able to offer such products with attractive rates.

These accounts are ideal for short-term savings goals where you want to earn a bit more interest than a regular savings account without compromising on safety. One major perk is FDIC insurance, which covers potential losses of up to $250,000 per institution and the ability to withdraw funds at any time, providing both security and liquidity. To get one, simply open an account with a bank that offers high-yield savings accounts.

  • Why invest: Higher interest than regular savings, Federal Deposit Insurance Corp. (FDIC)-insured
  • Risks: Returns are still quite low and some banks may charge account fees
  • Safety: High
  • Liquidity: High

3) Money Market Funds

Money market funds are low-risk as they invest in stable, short-term debt instruments and certificates of deposit. Though rates are still relatively modest, they usually offer higher yields than savings or money market accounts. Fund shares are targeted to $1 per share. Returns are variable based on holdings, and money market funds are not FDIC-insured. These funds are suitable for investors seeking a bit more yield than a savings account but who also value liquidity and safety.

To invest, one must buy shares in a money market fund through a brokerage or a mutual fund company.

  • Why invest: Higher yields than savings accounts, very safe, very liquid
  • Risk of investing: Not FDIC-insured, and returns are modest
  • Safety: High
  • Liquidity: High

Money market funds and money market accounts are two common low-risk savings vehicles that are often confused with each other. Money market accounts are FDIC insured up to $250,000, while money market funds do not offer FDIC protection.

4) Certificates of Deposit (CDs)

CDs are low-risk, FDIC-insured investments that offer fixed interest rates over a set period (often six months to five years). Their returns are usually higher than savings accounts, but still fixed and predictable. CDs can be well-suited for investors who don’t need immediate access to their funds and are looking for relatively higher, guaranteed returns over a specific period.

To invest, purchase a CD through a bank, choosing the term and rate that best fits your financial timeline.

  • Why invest: Guaranteed fixed interest rates, FDIC-insured
  • Risk of investing: Funds locked up until maturity, early withdrawal penalties, possible account minimums
  • Safety: High
  • Liquidity: Low

5) Treasury’s

Treasury securities like T-bills and T-notes are very low-risk as they’re issued and backed by the U.S. government. They provide a safe way to earn a return, albeit generally lower than aggressive investments. Treasurys are generally considered “risk-free” since the federal government guarantees them and has never (yet) defaulted.

These government bonds are often best for investors seeking a safe haven for their money, particularly during volatile market periods. They offer high liquidity due to an active secondary market. You can purchase these securities through your broker or the government’s TreasuryDirect website.

  • Why invest: Extremely safe, backed by the U.S. government, highly liquid
  • Risk of investing: Lower returns compared with somewhat riskier bonds
  • Safety: Very high
  • Liquidity: High


Treasury Inflation-Protected Securities (TIPS) offer low-risk investment opportunities. Their added perk is that their principal adjusts with inflation, thus providing a hedge against inflation. Like Treasurys, these are also backed by the U.S. government.

TIPS offer high liquidity and inflation protection but can underperform during periods of low inflation or when real interest rates are rising, as their value is directly tied to inflation trends. Additionally, their returns may not be as high as other fixed-income securities in a stable or deflationary economic environment. You can buy TIPS through TreasuryDirect or your brokerage account.

  • Why invest: Inflation protection, backed by the U.S. government
  • Risk of investing: Can underperform in low inflation environments
  • Safety: High
  • Liquidity: High

7) AAA Bonds

Investment-grade bonds, particularly short-duration ones and those with the highest AAA rating, are considered low to moderate risk. They are highly rated, indicating a lower default risk, and offer moderate returns. Still, bond prices are sensitive to interest rate changes and can become riskier if the issuer faces financial troubles or insolvency later on.

Corporate bonds are suitable for investors seeking steadier but potentially higher returns than government securities, with a reasonable level of risk (depending on the bond). To invest, you can buy these bonds through a brokerage account.

  • Why invest: Potential for higher returns than government bonds
  • Risk of investing: Comparatively higher credit & default risk, sensitive to interest rate changes
  • Safety: Moderate
  • Liquidity: Moderate

8) Bond Funds

Bond funds, which are managed portfolios of various bonds packaged into mutual funds or ETFs, have low to moderate risk, depending on their particular investment strategy. Diversification within the fund reduces risk, and returns are generally steady. These are particularly attractive for investors looking for diversified bond exposure without having to buy individual bonds.

You can buy bond funds through mutual fund companies or brokerage accounts.

  • Why invest: Diversification reduces risk, steady returns
  • Risk of investing: Returns are generally lower than stock funds and have lower fund management fees
  • Safety: Moderate
  • Liquidity: High

9) Municipal Bonds

Municipal bonds are low to moderate risk and are funded by tax collection or other government revenues (such as toll roads or bridges). They can offer tax-free income at the federal (and sometimes state & local) level. As such, “munis” are particularly attractive to investors in higher tax brackets.

A drawback is that municipal bonds are somewhat illiquid, with a less active secondary market compared with other securities. To invest, buy municipal bonds through a specialized municipal bond dealer or, in some cases, directly from the issuing municipality. Municipal bond funds are also available; they may be more liquid but may not cater to your particular tax situation.

  • Why invest: Tax-free income, funded by government revenues
  • Risk of investing: Less liquid secondary market, some municipalities may be at higher risk
  • Safety: Moderate
  • Liquidity: Moderate

10) Annuities

Annuities are low-risk investments that provide fixed, steady income in return for an upfront investment — guaranteed either for a set period of time, or for life. The returns are backed by the insurance company issuing the annuity. However, the funds put into an annuity are often locked up or exchanged for the flow of future cash flows. Therefore, they are not liquid. Indeed, annuities are often best suited for older individuals looking for a steady, guaranteed income stream, particularly during retirement.

The process of buying involves selecting an annuity type and making an investment through an insurance company or agent.

  • Why invest: Guaranteed fixed income, often for life
  • Risk of investing: Funds locked up, minimal liquidity, may only be available to older individuals
  • Safety: High
  • Liquidity: Low

11) Cash-Value Life Insurance

Cash-value life insurance combines the protection of life insurance with the benefit of a savings component. The risk level is generally low, as it not only guarantees a payout to beneficiaries upon the policyholder’s death but also allows the cash value to grow at a set interest rate and without the risk of loss, often tax-deferred. This growth rate is often more favorable compared with traditional savings vehicles, though it typically offers lower returns than more aggressive investment options.

The cash value grows tax-deferred, and beneficiaries receive the death benefit tax-free. Additionally, policyholders can borrow against the cash value tax-free, though loans can reduce the death benefit and cash value.

This type of insurance is best suited for individuals who are looking for a long-term investment that provides both a death benefit and a potential cash accumulation. It’s particularly appealing to those who have maximized other retirement savings options and are seeking additional tax-advantaged ways to save. It can also be a strategic tool for estate planning.

  • Why invest: Tax-deferred growth, tax-free loans, estate planning benefits
  • Risk of investing: More complex, less liquidity, not suitable for short- or medium-term growth
  • Safety: High
  • Liquidity: Low

What Is the Safest Asset of All?

The concept of the “safest investment” can vary depending on individual perspectives and economic contexts, but generally, cash and government bonds, particularly U.S. Treasury securities, are often considered among the safest investment options available. This is because there is minimal risk of loss.

That said, it’s important to note that no investment is entirely risk-free. Even with cash and government bonds, there is a risk of inflation outpacing the yield, leading to a decrease in purchasing power over time.

Why Is there A Risk-Return Tradeoff?

There are several reasons proposed for the risk-return tradeoff, which is a cornerstone concept of financial economics. It implies that lower-risk investments will also offer lower expected returns.

Higher returns are often required by investors as compensation for the increased uncertainty and potential for loss associated with riskier investments. When investors put money into an asset with a high level of risk, such as a new tech startup, they face a higher chance of losing their investment. Therefore, they expect higher returns to justify this risk.

The time-value of money further states that money available now is worth more than the same amount in the future due to its potential earning capacity and opportunity costs. Riskier investments must offer higher returns to compensate for the possibility that the future value of the investment might be lower than expected or even negative.

Can Money Market Funds Ever Result in a Loss?

While money market funds are considered very low-risk, they are not entirely risk-free. Unlike bank savings accounts, they are not insured by the FDIC. There have been rare instances, such as during severe financial crises, where money market funds “broke the buck,” meaning their value dropped below the target $1 per share, leading to losses for investors. However, regulatory changes have been made to increase their stability since the 2008 financial crisis.

Are There Any Safe Assets that Are Also Socially Responsible?

Yes, there are safe investment options that also consider social or environmental impacts. Green bonds, for example, are often issued by governments and corporations to fund environmentally-friendly projects. They typically carry lower risk, like other government or corporate bonds, while contributing to positive environmental outcomes. Additionally, some municipal bonds will finance projects with social or environmental benefits, combining safety with social responsibility.

The Bottom Line

Safe assets such as U.S. Treasury securities, high-yield savings accounts, money market funds, and certain types of bonds and annuities offer a lower risk investment option for those prioritizing capital preservation and steady, albeit generally lower, returns. While they may not provide the high returns of riskier assets like stocks, they play a crucial role in a diversified portfolio, offering stability, predictable income, and protection against market volatility. These assets are particularly appealing for risk-averse investors, those nearing retirement, or anyone looking to balance out higher-risk investments. However, it’s important to be mindful of their limitations, such as lower returns that may not keep pace with inflation and the varying degrees of liquidity and tax implications. Ultimately, the choice of safe assets should align with individual financial goals, risk tolerance, and overall investment strategy.

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