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Low-risk investments are those that have very little chance that the money invested in them will be lost. They can be a very safe place to invest capital in times of market volatility. Examples of low-risk investments include certificates of deposit, savings accounts, US savings bonds and blue-chip stocks.
High versus low risk
Some types of investments can involve a great risk that the money invested will be lost. This is in exchange for the possibility of a greater financial gain. Other investments may involve less risk. This is frequently in exchange for greater security and a lower possibility of large financial gains.
A certificate of deposit is money invested in an account in exchange for a certain agreed interest rate. During this period of time, the money cannot be withdrawn without financial penalties, and without often including loss of interest. Many certificates of deposit (or CD, as they are popularly known) are invested in banks.
A CD can be retained for a minimum of three months and a maximum of five years and sometimes a little more. The federal government secures the certificate of deposit. This means that the United States government guarantees the investment in case the institution that is holding it fails.
Most savings accounts are in banks or other similar financial institutions such as credit unions. The investor can regularly deposit any amount of money in the account he wants. In exchange, the savings account earns interest on the money deposited. Money invested in savings accounts can be withdrawn at any time for any reason without any financial penalty. Savings accounts are considered very safe investments because the federal government insures money in the account against the loss of capital.
United States Savings Bonds
Bonds are loans to a company or municipality. The investor earns money in exchange for allowing the company or state to use their money for a certain period of time. During this period the investor cannot access the value of the bond without having monetary consequences.
The United States government also has bonds. Treasury bonds can be purchased in increments ranging from less than a year to many decades. A savings bond is a very safe investment because, like CDs and savings accounts, any money invested is also backed by the power and has stability from the US government.
Shares are “parts” of a company normally available for purchase from the general public. Blue-chip stocks are shares of highly capitalized companies with a long history of solid profits. It can be an act of any industry.
These actions are considered low-risk investments because they regularly maintain their long-term value. The investor faces a very low chance of losing his capital.