5 Best Safe, Low-Risk Investments
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
All investments carry some risk, but some also offer insurance, making them virtually risk-free.
Money market accounts, certificates of deposit, cash management accounts and high-yield savings accounts all carry FDIC insurance.
Treasury bills, notes and bonds are backed by the U.S. government, making them another low-risk investment option.
When the markets or geopolitical events turn volatile, safe, low-risk investments often get a moment in the sun. Federal Deposit Insurance Corporation (FDIC)-insured accounts and other safer investments can help cautious investors combat inflation while securing their savings.
NerdWallet rating 4.8 /5 | NerdWallet rating 5.0 /5 | NerdWallet rating 4.6 /5 |
Fees $0 per online equity trade | Fees $0.005 per share; as low as $0.0005 with volume discounts | Fees $0 |
Account minimum $0 | Account minimum $0 | Account minimum $0 |
Promotion None no promotion available at this time | Promotion Exclusive! U.S. residents who open a new IBKR Pro account will receive a 0.25% rate reduction on margin loans. Terms apply. | Promotion Earn up to $10,000 when you transfer your investment portfolio to Public. |
Are there safe investments with high returns?
While low risk generally does mean sacrificing high returns, safer investment options like online savings accounts and certificates of deposit are paying significantly more than they have in recent history.
Still, the below accounts and investments often make the most sense when investing for the short term — meaning you may need to withdraw the money sometime soon, or you just can't stomach the stock market's wild ride. (If your goal is five or more years away, low-cost equity investments might be an option — long timelines allow you to ride out stock market volatility. Learn more about long-term investing.)
Safe, FDIC-insured and government-backed options
The investments below all come with insurance, which make their risk practically nonexistent. Traditionally, they are considered very safe investments. However, their yields are also lower, which is a typical trade-off when you're investing for safety.
1. Money market accounts
What are they? These are savings accounts that allow you to spend directly from the account. Savings accounts, by comparison, limit the number of transactions per month.
Current returns: 5% or more. See our best money market accounts page for up-to-date rates.
What's safe about them? These FDIC-backed accounts guarantee deposits of up to $250,000 per institution per investor.
Where can I get one? Most banks offer money market accounts, but the national average APY per the FDIC is currently just 0.60%. (This rate is variable and may change). However, many online banks offer substantially higher rates.
2. Online high-yield savings accounts
What are they? These are fundamentally similar to typical savings accounts, but by operating strictly online, these banks don’t have to spend money on brick-and-mortar operations. In turn, they pass these savings on to you in the form of higher APYs.
Current returns: 5% or more. See NerdWallet’s list of high-yield online savings accounts for up-to-date rates.
What's safe about them? Though they don’t come from a traditional brick-and-mortar bank, these accounts are still FDIC-insured.
Where can I get one? Everything is done online, from choosing a bank to enrolling and transferring money into it.
3. Cash management accounts
What are they? The nature of these accounts varies slightly between providers today, but most of these products behave similarly to an online savings account. These have become more popular among online brokerages and robo-advisors lately because they make it easy for customers to move money seamlessly to and from an investing account.
Current returns: Around 5% or more. See NerdWallet’s best cash management accounts for current APYs.
What's safe about them? Cash management accounts are offered by non-bank financial institutions, yet the FDIC still backs them through partnerships with banks.
Where can I get one? At an online brokerage or robo-advisor.
4. Certificates of deposit (CDs)
What are they? Banks offer CDs because it gives them a set amount of cash upfront for a set period, which they can use to lend to other customers or invest. They often offer higher rates than savings accounts to incentivize you to start a CD. The downside? If you need to access the cash in your CD, you may be hit with an early withdrawal penalty, often consisting of a few months’ interest.
Current returns: Around 5% on the high end, depending on the term. See NerdWallet’s list of the Best CD rates.
What's safe about them? With these, you put your money into an FDIC-insured account for a specified period, during which you’ll receive a guaranteed interest rate.
Where can I get one? Most banks offer CDs. Most banks offer CDs. However, for the same reasons noted above, yields tend to be much higher through online banks.
5. Treasury notes, bills and bonds
What are they? When you purchase Treasurys, you’re essentially giving a loan to the government, and it’s paying you interest on that loan at regular intervals. If you hold it for the entire period, you’ll also get back the bond’s face value.
The most significant differences between Treasury bills, notes, and bonds are the length of time the government holds your money and your interest rate.
Current returns: Vary. See the latest rates on Treasury.gov.
What's safe about them? Treasury securities (bills, notes and bonds) are backed by the “full faith and credit of the U.S. Government.” When purchasing them from the Treasury, you’ll get any regular interest payments promised to you so long as you own the bond, plus the face value of the bond if you hold it until maturity.
Alternatively, you can sell your bond if you wish, though you’ll lose out on the interest payments you would have had until it matured.
Where can I get one? From TreasuryDirect.gov or through an online broker.
Next steps
On a similar note...
