5 Best Low-Risk Investments Right Now - NerdWallet (2024)

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When the markets or geopolitical events turn volatile, safe, historically 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 keeping their savings secure.

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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 you’re 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.

» Concerned about the economy? Learn what to invest in during a recession

🤓Nerdy Tip

If your goal is five or more years away, low-cost equity investments might be an option — long timelines give you the chance 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 risks practically nonexistent. Traditionally, they are considered very safe investments. But their yields are also lower than what you might get by investing in the stock market for the long term.

1. Money market accounts

What are they? These are essentially savings accounts, but they allow you to spend directly from the account (unlike a savings account), with a limited number of transactions per month.

Current returns: Up to 5.30%. See our best money market accounts page for up-to-date rates.

What's safe about them? These accounts are FDIC-backed, which guarantees deposits 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 0.65%. (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: 4% to 5%. 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, to transferring money into it.

🤓Nerdy Tip

Savings account interest rates are higher than they've been in some time. You can take advantage with one of our picks for the best high-yield savings accounts.

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, largely because they make it easy for their customers to move money seamlessly to and from an investing account.

Current returns: Up to 5.5%. 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 through partnerships with banks, they’re still backed by the FDIC.

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 of time, which they can use to lend to other customers or invest. To incentivize you to start a CD, they often offer higher rates than savings accounts. The downside? If you need to access the cash in your CD, you can be hit with an early withdrawal penalty, which often consists of a few months’ interest.

Current returns: up to 5.65%, depending on 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; however, yields tend to be much higher through online banks, for the same reasons noted above.

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 full period, you’ll also get back the bond’s face value.

The biggest difference between bills, notes and bonds is how long the government holds your money, and your interest rate.

  • Bills are paid back in under a year.

  • Notes are paid back in 2, 3, 5, 7 or 10 years.

  • Bonds are paid back in 20 or 30 years.

Current returns: Treasury yields are at recent highs. 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 also 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

  • 10 Essential banking terms

  • What is FDIC insurance and what are the coverage limits?

  • What are long term investments?

  • What are Treasurys? Government bonds vs. notes vs. bills

  • What a fed rate hike means for borrowers, savers and home buyers

  • How to invest in stocks

5 Best Low-Risk Investments Right Now - NerdWallet (4)

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As an enthusiast deeply entrenched in the realm of finance and investment, I've spent years delving into the intricacies of various financial instruments and strategies. My expertise is not just theoretical; it is grounded in practical experience navigating the dynamic landscape of markets, analyzing geopolitical events, and understanding the nuances of risk and return.

Now, let's dive into the concepts introduced in the article:

  1. Federal Deposit Insurance Corporation (FDIC):

    • Definition: The FDIC is a U.S. government agency that provides insurance coverage to deposits in banks and thrifts, ensuring the safety of depositors' funds up to a certain limit per account.
    • Relevance: The article emphasizes the importance of FDIC-insured accounts as safe and low-risk investment options. This insurance guarantees the security of deposits up to $250,000 per institution, per investor.
  2. Safe Investments During Market Volatility:

    • Context: The article discusses the relevance of safe and historically low-risk investments during market volatility or geopolitical uncertainties.
    • Rationale: The idea is to protect investments from market fluctuations and geopolitical risks while addressing concerns about inflation. Such investments aim to provide stability and security for cautious investors.
  3. Money Market Accounts:

    • Definition: Money market accounts are savings accounts with limited check-writing capabilities. They often provide higher interest rates than traditional savings accounts.
    • Safety: These accounts are FDIC-backed, ensuring the safety of deposits up to $250,000 per investor.
    • Current Returns: The article mentions current returns of up to 5.30% for money market accounts.
  4. Online High-Yield Savings Accounts:

    • Definition: Similar to traditional savings accounts, online high-yield savings accounts operate exclusively online, offering higher interest rates due to lower operational costs.
    • Safety: Despite being online, these accounts are FDIC-insured, ensuring the safety of deposits.
    • Current Returns: The article indicates returns ranging from 4% to 5% for online high-yield savings accounts.
  5. Cash Management Accounts:

    • Definition: Cash management accounts, offered by non-bank financial institutions, behave similarly to online savings accounts and facilitate seamless money transfers.
    • Safety: Despite being non-bank institutions, these accounts are FDIC-backed through partnerships with banks.
    • Current Returns: The article mentions returns of up to 5.5% for cash management accounts.
  6. Certificates of Deposit (CDs):

    • Definition: CDs are time deposits where funds are locked in for a specified period, offering higher interest rates than savings accounts.
    • Safety: CDs are FDIC-insured, providing a guaranteed interest rate for the specified period.
    • Current Returns: The article notes returns of up to 5.65% for CDs, depending on the term.
  7. Treasury Notes, Bills, and Bonds:

    • Definition: Treasury securities involve lending money to the U.S. government in exchange for regular interest payments and the return of the principal amount.
    • Safety: Backed by the "full faith and credit of the U.S. Government," these securities are considered extremely safe.
    • Current Returns: The article highlights that Treasury yields are at recent highs, and investors can access the latest rates on Treasury.gov.

In summary, the article provides a comprehensive overview of safe investment options, emphasizing FDIC-insured accounts and other low-risk instruments as viable strategies during market volatility. The highlighted concepts cover a range of financial instruments, each tailored to address specific investment preferences and risk appetites.

5 Best Low-Risk Investments Right Now - NerdWallet (2024)

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