Do the volatile ups and downs of the stock market make your stomach churn?
Does the thought of buying a fixer-up to flip give you pause?
Do you break out in a nervous sweat whenever someone suggests getting into crypto?
If you answered yes to any of these questions, you probably have a low risk tolerance.
You worry more about losing money than missing out on the opportunity to make more of it.
Being cautious about how youinvest your moneyis a good thing.
Can You Survive 10 Days of Budgeting?
If it’s crucial that you wrangle your budget, it may be time to consider a savings challenge.
Do Safe Investments Actually Exist?
But consider that savings accounts, on average, pay just 0.13% APY.
Then you have a year like 2022, when inflation hit 8.5%.
Theres also the risk of missed opportunity.
Though theres no such thing as a risk-free investment (all investing involves risk!
), there are plenty of safe ways to invest your money.
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Here are eight options that are good for conservative investors.
(Spoiler: Gold, bitcoin and penny stocks did not make our list.)
You get a fixed interest rate as long as you dont withdraw your money before the maturity date.
Typically, the longer the duration, the higher the interest rate.
Since theyre FDIC insured, CDs are among the safest investments in existence.
But low risk translates to low rewards.
Those low interest rates for borrowers translate to lower APYs for money we save at a bank.
Even for five-year CDs, the best APYs are just over 1%.
You also risk losing your interest and even some principal if you gotta withdraw money early.
In comparison, you’re able to withdraw money from a savings account without fear of penalty.
(More on those shortly.)
The returns are often on par with CD interest rates.
But because they arent FDIC insured, they can technically lose principal, though theyre considered extraordinarily safe.
Treasury Inflation Protected Securities (TIPS)
The U.S. government finances its debt by issuing Treasurys.
Unless the federal government defaults on its debt for the first time in history, investors get paid.
The price of that safety: pathetically low yields that often dont keep up with inflation.
TIPS offer built-in inflation protection as the name Treasury Inflation Protected Securities implies.
The twice-a-year interest payments are adjusted accordingly, as well.
On the flip side, if theres deflation, your principal is adjusted downward.
Some treasury bills can mature in just a few days.
Municipal Bonds
Municipal bonds, or munis, are bonds issued by a state or local government.
Theyre popular with retirees because the income they generate is tax-free at the federal level.
Sometimes when you buy muni bonds in your state, the state doesnt tax them either.
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Because investment-grade corporate bonds are low risk, the yields are low compared to higher-risk junk bonds.
Thats because corporations with low credit ratings have to pay investors more to compensate them for the extra risk.
Target-Date Funds
When you comparebonds vs. stocks, bonds are generally safer, while stocks offer more growth.
Target-date funds make that reallocation automatic.
Theyre commonly found in401(k)s, IRAs and529 plans.
You choose the date thats closest to the year you plan to retire or send your child to college.
A total stock market exchange-traded fund (ETF) will invest you in hundreds or thousands of companies.
Usually, they reflect the makeup of a major stock index, like the Wilshire 5000.
Same goes for if the market drops 5%.
If youre playing day trader, the stock market is a risky place.
But when youre committed to investing in stocks for the long haul, youre way less exposed to risk.
Dividends are commonly offered by companies that are stable and have a track record of earning a profit.
Younger companies are less likely to pay dividends because they need to reinvest their profits.
They have more growth potential, but theyre also a higher risk because theyre less established.
Drowning in Expenses?
Maybe youre scrambling after your car broke down.
Or you got a medical bill you werent expecting.
Or inflation has finally pushed your budget over the edge.
You dont need to go it alone.
When money is tight,these resourcescan help you manage unexpected expenses without stress.
When prioritizing safe investments, youve got to be willing to take the good with the bad.
She writes the Dear Penny personal finance advice column.
Send your tricky money questions to[email protected].
Timothy Moore, who covers banking, investing and insurance, among other topics, contributed to this report.
