Top 10 Low-Risk Investment Options in 2023

Nov 20, 2023

By: Sahib Preet Singh

Diversifying Investments: Navigating the Spectrum from Safety to Complexity

In the world of investments, achieving success requires a strategic balance between risk and reward. While traditional choices like savings accounts and certificates of deposit offer stability, venturing into complex options such as corporate bonds and fixed a...

1. Series I Savings Bonds

Series I savings bonds are low-risk investment options designed to combat inflation. These bonds adjust their interest rates semi-annually based on inflation fluctuations—rising when inflation increases and falling during periods of reduced inflation. Offering...

2. Short-Term Certificates of Deposit

Short-term certificates of deposit (CDs) present a secure investment option backed by FDIC insurance, safeguarding against losses unless early withdrawal occurs. In the case of rising interest rates, exploring online options to secure favorable rates is advisa...

3. High-Yield Savings Accounts

High-yield savings accounts, while not classified as investments, provide a modest return on funds. Although the cash value remains stable, the advantage lies in the safety of these accounts—they are government-insured up to $250,000 per account type per bank....

4. Money Market Funds

Money market funds, comprising low-risk investments like CDs and short-term bonds, offer diversification and are commonly provided by brokerage firms and mutual fund companies. Unlike CDs, money market funds are liquid, allowing easy access to funds without pe...

5. Treasury Bills, Notes, Bonds and TIPS

The US Treasury issues various securities, including Treasury bills, Treasury notes, Treasury bonds, and Treasury inflation-protected securities (TIPS), where the principal value responds to inflation changes. All these options offer high liquidity and can be ...

6. Corporate Bonds

Corporate bonds vary in risk, ranging from low-risk options issued by large, profitable companies to high-risk "junk bonds." High-yield corporate bonds, characterized by low rates and quality, pose additional default risk along with interest-rate ris...

7. Dividend-Paying Stocks

While not as secure as cash or government debt, stocks, especially dividend-paying ones, carry less risk than high-flying options or futures. Dividend stocks, providing regular cash dividends, are deemed safer than high-growth stocks, offering stability and mi...

8. Preferred Stocks

Functioning more like lower-grade bonds than common stocks, preferred stocks, while offering regular cash payouts like bonds, can still experience substantial value fluctuations with market downturns or rising interest rates. Serving as a hybrid security, pref...

9. Money Market Accounts

Similar to a savings account, a money market account provides benefits like a debit card and interest payments, although it may necessitate a higher minimum deposit. Boasting potentially higher rates than comparable savings accounts, it grants the flexibility ...

10. Fixed Annuities

A fixed annuity, a contractual agreement often made with an insurance company, ensures a predetermined income over a specified period, typically monthly. Contributions can be made as a lump sum for immediate payouts or gradually for future payouts, such as ret...