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From the stock market to real estate investing, there are multiple ways to grow your money and meet your financial goals. That said, no matter the type of investment, there’s always a risk that comes with it.
Especially, whenever there’s high inflation and talk of a recession, many people look for ways to keep their hard-earned cash. Fortunately, there are low-risk, or “safer,” investment options that can help keep you afloat in a volatile market.
While low-risk investments may not deliver high returns, they help balance and diversify your portfolio for a better overall return, which is a good idea if you have early retirement in mind.
You might wish to consider five low-risk investments:
1. Fixed Annuities
Fixed annuities are long-term contracts you purchase from an insurance company that guarantees you a return on your contributions to the account. Having a fixed annuity is a popular way to grow your money in a tax-deferred account and secure monthly income during retirement.
2. High-Yield Savings Accounts
High-yield savings accounts are similar to traditional savings accounts—you can store and earn interest on your money—however, the difference lies in the interest rates. High-yield savings accounts typically offer 20 times the amount of interest than traditional accounts, which helps grow your savings faster.
3. Certificates of Deposit (CDs)
Certificates of deposit, or CDs, are savings accounts offered by banks and credit unions. CD accounts require you to leave your money untouched for a set period of time in exchange for relatively high interest rates.
4. Money Market Funds
Money market funds are low-risk mutual funds that let you invest in short-term government or corporate debt. In return, they’ll pay you and other shareholders back with interest.
5. Index Funds
Lastly, index funds are another type of mutual fund. Index funds follow the performance of stock indexes, such as the S&P 500, and buying into one gives you a share in profit of all the corporations within it. Index funds are affordable and diverse, creating lower risk than other investment options.
In addition to the five options above, there are others that can also serve as a safety net. For additional investment tips, see Annuity.org.
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“An investment in knowledge pays the best interest.”
-Benjamin Franklin
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