Investors face a variety of risks as the economy slows down and President Donald Trump’s tariffs are likely to inflation. Building a portfolio with at least low-risk assets can help you survive volatility in the market.
The trade-off, of course, is that investors are more likely to get low returns over the long term when lowering risk exposure. If your goal is to maintain capital and maintain a steady flow of interest income, that trade-off may be fine.
However, if you are looking for growth, consider an investment strategy that matches your long-term goals. Highly risky investments such as stocks have segments (such as dividend stocks) that reduce relative risk while providing attractive long-term returns.
What should you think
Depending on how much risk you take, there are several scenarios that can be deployed:
- There is no risk – You will not lose a number of cents from the principal.
- Some risks – You may lose money, but there are often opportunities to create more than a risk-free scenario.
However, there are two catches. Low-risk investments can earn lower returns than elsewhere at risk. Inflation can erode the purchasing power of money, which is etched into low-risk investments.
If you choose only low-risk investments, you may lose your purchasing power over time. That’s also why low-risk plays become a better short-term investment or stash for your emergency fund. In contrast, high-risk investments are good for long-term goals.
The best low-risk investments of 2025 are:
- High-yield savings account
- Money Market Fund
- Short-term certificate of deposit
- Cash Management Account
- Treasurys and Tips
- Corporate debt
- Dividend paying stocks
- Preferred Stocks
- Money Market Account
- The pension has been revised
Summary: Best Low-Risk Investment in 2025
1. High-yield savings account
Although technically it’s not an investment, a savings account offers a modest return on your money. You can find the best harvesting options by searching online. If you want to check out the rate table and shop, you can get a little more yield.
Why invest: A high-yield savings account is completely safe in the sense that you never lose money. Most accounts have government insurance up to $250,000 per account type per bank, so they are covered in the event of a financial institution failing.
risk: Inflation can undermine purchasing power, but cash does not lose its dollar value.
2. Money Market Fund
Money market funds are a pool of CDs, short-term bonds and other low-risk investments grouped to diversify risk, typically sold by brokerages and mutual fund companies.
Why invest: These mutual funds usually pay cash interest on their regular schedules, each month. Unlike CDs, money market funds are in liquidity. This means that you can usually take away your funds at any time without being subjected to a fine.
risk: Money market funds are usually very safe, according to Ben Wacek, founder and financial planner of Guide Financial Planning in Minneapolis.
“Banks tell you what rates to get. The goal is to not have a value per share of less than a dollar,” he says.
3. Short-term deposit certificate
Bank CDs can always withstand losses with FDIC-backed accounts unless you remove your money early. To find the best prices, you’ll want to shop online and compare what the bank has to offer. Short-term CDs can provide better liquidity than long-term CDs, and interest rates remain attractive even if the Fed is cutting interest rates.
A replacement for short-term CDs is a non-penalty CD. This allows you to dodge the typical penalty for early withdrawals. So you can withdraw money and move it to a higher paying CD without the usual costs.
Why invest: If you leave the CD intact until the term ends, the bank promises to pay the interest rate set in the specified term.
Some savings accounts pay a higher interest rate than some CDs, but so-called high-yield accounts may require a large deposit, and the fees vary.
risk: If you remove funds early from a CD, you will usually lose some of the interest you have acquired. It’s important to read the rules and check the CD rate before investing, as some banks will also hit you with the loss of some of their principals. Plus, if you get trapped in long-term CDs and your overall rate increases, you’ll earn less otherwise. To get the market rate, you will need to cancel the CD and usually you will have to pay a penalty for that.
4. Cash Management Account
Cash management accounts are a typical feature of many brokerage companies, and accounts can perform many different functions and make them an attractive place to hold cash. The best cash management accounts can be used as checking and savings accounts and may offer competitive interest rates without charging a bill. In some cases, your cash management account may be your brokerage default account until you decide to invest in a stock, mutual fund, or something else.
Why invest: With cash management accounts, you may be able to earn competitive interest rates, even if you can spend or invest in the stock market. Many cash management accounts offer automatic sweeps that move unused cash into high-yield money market funds. If you decide to invest or use your money, it may be seamlessly taken out of the money market fund and transferred.
risk: Money market mutual funds are safe, but there is no FDIC support. Account interest rates fluctuate. You will need to read the detailed printouts of your account to see which rate you are getting.
5. Treasurysand Tips
The US Treasury also issues Treasury bills, Treasury bonds, Treasury bonds, Treasury inflation protection securities, or tips.
- The Treasury bill will mature within a year.
- The Ministry of Finance’s memo has grown for up to 10 years.
- The Ministry of Finance is matured in up to 30 years.
- The hint is securities whose key value rises and falls depending on the direction of inflation.
Why invest: All of these are highly liquid securities that can be bought and sold directly or through mutual funds.
risk: If you hold the gems until they mature, you will not usually lose money unless you buy negative bonds. If you sell earlier than maturity, you could lose some of your principals as the value fluctuates as interest rates go up and down. Rising interest rates will reduce the value of existing bonds and vice versa. The Short-Term Treasury is a better bet if you think fees will rise in the short term.
6. Corporate debt
Companies also issue bonds where relatively low-risk varieties (issued by large, profitable companies) can come from very dangerous ones. The most risk is known as high-yield bonds or “junk bonds.”
“We are pleased to announce that we are committed to providing investment advice for Chicago-area CGN Advisors,” said Cheryl Krueger, CEO of Investment Advisors. “We consider them to be more risky because not only the risk of interest rates, but also the risk of default.”
- Interest risk: As interest rates change, the market value of bonds can fluctuate. Bond values ​​rise when they rise, while bond values ​​fall when interest rates rise.
- Default risk: The company may not be able to do well with its promise to pay interest and principal, leaving nothing in its investment.
Why invest: To mitigate the risk of interest, investors can choose mature bonds over the next few years. Long-term bonds are more sensitive to changes in interest rates. To reduce the risk of default, investors can choose high-quality bonds from large, reputable companies, or buy funds to invest in a diverse portfolio of these bonds.
risk: Bonds are generally considered to be less risky than stocks, but neither asset class has risk.
“Bonus holders have a higher order order than shareholders, so if the company goes bankrupt, the bondholders will reclaim the money before the shareholders,” says Wacek.
7. Dividend paying stocks
Stocks are not as secure as cash, savings accounts, or government debt, but generally have less risk than high prices such as options and futures. Dividend stocks are considered safer than high-growth stocks. Because they pay cash dividends, which helps limit volatility, but they don’t rule it out. Therefore, dividend stocks fluctuate in the market, but may not fall much if the market is falling.
Why invest: Stocks paying dividends are generally perceived as having lower risk than those that do not.
“I’m not saying that stocks paying dividends are low-risk investments because there were dividend-paying stocks that lost 20 or 30 percent in 2008,” Wacek said. “But in general, it’s less risky than growth stock.”
This is because dividend paying companies tend to mature more steadily and offer dividends and potential for stock price rise.
“You don’t rely solely on the value of the stock, but it can fluctuate, but you’re also paid for your usual income from the stock,” Wacek says.
risk: One risk of dividend stocks is when a company encounters tough times and declares losses and forces it to completely reduce or eliminate dividends, causing it to undermine the stock price.
8. Preferred Stocks
Preferred stocks are more like lower grade bonds than common stocks. Still, if the market falls or interest rates rise, its value can fluctuate significantly.
Why invest: Like bonds, preferred stocks make regular cash payments. However, unusually, companies that issue preferred stocks may be able to suspend dividends in some circumstances, but in many cases, companies have to miss out on payments. The company must then pay dividends on the preferred shares before paying the dividends to the common shareholders.
risk: Preferred stocks are like a risky version of bonds, but are generally safer than stock. They are often referred to as hybrid securities, as holders of preferred stocks are paid before shareholders rather than after bondholders. Preferred stocks are usually traded on stock exchanges, like other stocks, and should be carefully analyzed before purchasing.
9. Money Market Account
A money market account may feel like a savings account. It also offers many of the same benefits, such as debit cards and interest payments. However, money market accounts may require a higher minimum deposit than a savings account.
Why invest: Money Market accounts may charge higher than comparable savings accounts. Additionally, you have the flexibility to use cash when needed, but like a savings account, there may be restrictions on monthly withdrawals. You should search for the best prices here to make sure you maximize your return.
risk: Money Market accounts are protected by FDIC and have a guarantee of up to $250,000 per depositor per bank. Therefore, a money market account will not present any risk to your principal. Perhaps the biggest risk is the cost of having too much money in your account and not making enough profits to outweigh inflation. This means that you may lose your purchasing power over time.
10. The pension has been revised
Annuities are often contracts made with insurance companies, where you pay a certain level of income over a period of time in exchange for advance payments. Pensions can be configured in a variety of ways, including paying for a period of time, such as 20 years or even a client’s death.
With a fixed pension, the contract usually promises to pay a certain amount each month over a period of time. You can donate your lump sum and start immediately, or pay over time and start paying your pension on a future date (such as the date of retirement).
Why invest: Fixed pensions provide guaranteed income and returns, especially during periods when they are not working, providing greater financial security. Pensions can also provide a way to increase your income on a tax-deferred basis. You can also donate unlimited amounts to your account. Pensions can also come with a variety of other benefits, depending on your contract, such as death benefits and minimum guarantee payments.
risk: Pension contracts are equally complex, so if you don’t read the fine print of the contract very closely, you may not get exactly what you expect. Pensions are quite illiquid. This means it’s difficult or impossible to get out of one without taking any serious penalties. If inflation rises significantly in the future, guaranteed payments may not be attractive either.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. Furthermore, investors recommend that past investment products performance is not a guarantee of future price increases.