Following the news and watching the markets has been a rollercoaster as of late. With the US economy slowing down and analysts warning of an impending recession, everyone in the financial sector has cause for concern.
That’s why in this article, Investment News suggests ways to protect your hard-earned cash and other assets to ride out these turbulent times. To cushion your investments from the current volatility, one of the available options is to seek out and invest in the best low-risk investments, which we have listed here.
Cash is still king, but this is technically not a pure investment; rather, it is a source of investment. This is the most liquid and safest form of asset in a portfolio and is mainly used for short-term spending needs.
Hanging onto your cash makes it the safest and most accessible asset, but this gives very little return if deposited in a regular savings account and not used on other low-risk investments. Cash can also be easily surpassed by inflation – when the inflation rate is high, its purchasing power is significantly reduced.
This is a low-risk, highly liquid bank account option that offers better returns than ordinary savings accounts. HYSAs were offerings from banks with physical branches, but these are also available from online banks.
Online banks can give comparatively higher returns than traditional brick-and-mortar banks. Online banks do not need physical branches or employ people to operate, so they can pass on these savings as higher interest yields to customers.
HYSAs are ideal for short-term savings and investors want to earn a bit more interest compared to a regular savings account, while enjoying the same level of safety. Like regular savings accounts, HYSAs also enjoy the benefit of Federal Deposit Insurance Corporation (FDIC) protection. To invest in a HYSA, investors can simply open an account at a physical or online bank branch.
Money market funds can provide modest returns while also having low risk. Their low-risk rating and stability is due to their investment in certificates of deposit (CDs) and other short-term debt instruments.
Returns on money market funds can vary based on holdings, and the caveat is that these funds are not insured by the FDIC. The upside to money market funds is that they can offer a slightly higher yield than a savings account, while also providing a high degree of liquidity and safety.
Like savings accounts, CDs are low-risk, FDIC-insured investments. Typically, they offer fixed interest rates for a set period, usually from as short as six months to as long as five years.
While they have similar protections from the FDIC as with savings accounts, CDs are not as liquid, although they offer higher, fixed, and predictable returns. CDs are well-suited for investors who want relatively higher returns but don’t require immediate access to their funds.
Investing in CDs only requires purchasing them through a bank and choosing the term and rate that best fits investors’ needs.
Treasury bills, treasury notes, and treasury bonds are very low-risk and typically safe, since they are backed by the US government itself. Treasurys are a safe way to preserve capital and earn a return, with the major downside being that the returns are less than more aggressive investments like stocks.
Treasurys or treasury securities are generally considered the most risk-free investments with virtually no default risk. To date, the US government guarantees them and has never failed to pay these debt instruments.
This investment also serves as a secure and viable low-risk investment. A significant benefit of TIPs is that the principal amount adjusts along with inflation, thus providing an unusual buffer against it.
The disadvantage of TIPs is that their performance is dependent on inflation. When the economy performs well and inflation is low and interest rates are high, TIPs can give less than desirable returns.
Other fixed-income securities may give better returns than TIPs when the economy is stable and deflationary. Investors can buy TIPs and other treasury securities from the TreasuryDirect website or via a brokerage account.
These are investment-grade, corporate bonds that have a short duration and, as their name implies, are AAA-rated. Their risk level is considered moderate to low. Not only do AAA bonds have a low risk of default, but they also offer moderate returns.
The caveat to bonds is that they are sensitive to interest rate changes and can become riskier investments prone to default if the bond issuer faces financial difficulties or becomes insolvent. Corporate bonds like these are well-suited to investors who want steady but possibly higher returns than government securities.
Depending on the bond, there can be a reasonable level of risk involved. Investing in these bonds can be done through a brokerage account.
Another type of bond that’s considered a worthwhile low-risk investment is the bond fund. These are managed portfolios composed of different bonds, packed into mutual funds or exchange-traded funds (ETFs).
Bond funds can be low to moderate in terms of risk, and their risk level largely depends on the investing strategies they are based on. And since bond funds are composed of different bonds, this inherent diversification reduces the risk and can provide steady returns.
Investors seeking diverse bond exposure without having to nitpick and buy individual bonds will find bond funds very beneficial and attractive. Find out more in this beginner's guide to investing in bonds.
Also known as “munis”, municipal bonds are an attractive bond investment for investors who are in a higher tax bracket, as they offer tax-free income at the federal level. Some municipal bonds may even offer their tax-free income at the state or local level.
Munis are considered to have low to moderate risk, since they’re funded through taxes and municipal revenues from road or bridge toll payments.
The disadvantage of municipal bonds is that they have low liquidity due to their secondary market not being as attractive as those for other securities. It may be difficult to offload these bonds when you want to cash out. These bonds can be purchased from a municipal bond dealer or from the municipality that issues them.
Insurance companies typically offer annuities. These are classified as low-risk investments that can generate a fixed, steady income for investors. Annuities can provide income for a set period or for life, and returns are funded by the issuing insurance company. The main drawback to annuities is that they are illiquid in that the principal remains inaccessible or is exchanged for future cash flows.
Annuities are more suited to investors who need a guaranteed, steady income, typically those who are already retired and have fewer options of supporting themselves. This investment is generally bought into via an insurance company or agent.
This investment is a compelling combination of a life insurance policy and a savings account. The inherent risk of this investment is categorically low, enabling its cash value to grow at a set interest rate, without any risk of loss.
As it is a life insurance policy, apart from paying out a death benefit to beneficiaries of the policyholder, the earnings are tax deferred. While cash-value life insurance can provide higher returns than an ordinary savings account, it offers less returns than more aggressive investments.
Preferred stocks work as a kind of hybrid security that has features of both stocks and bonds. These dividend-paying stocks give higher returns than common stock and provide a higher claim on assets should there be a liquidation.
The disadvantage of preferred stocks is that they do not come with voting rights, so investors who own them do not have much control over decisions made by the issuing corporation. Securities like these are best suited for investors who want stable income than common stocks that have a higher risk. Be sure to read our guide on how to invest in stocks if this is your first venture into this investment.
Financial institutions and large companies issue preferred stocks to raise capital without diluting voting capacity. These stocks are typically traded on major stock exchanges, giving a degree of liquidity that is much like common stocks.
Let’s address the elephant in the room and talk about why low-risk investments are more essential now, more than ever: the administration of Donald J. Trump. His administration has not been a very good steward of the US economy, and the tariffs he imposed on close friends and rivals alike have wreaked havoc on the US stock market.
Historically profitable indexes like the S&P 500, Dow Jones and Nasdaq have experienced historic losses. The ripple effect of Trump’s tariffs has also dethroned the famed “Magnificent 7” stocks as market favorites.
Politics aside, remember that financial institutions like J.P. Morgan, several economists who were Nobel laureates, and even university experts warned that Trump’s economic policies would harm the US economy. Note some of these assessments were made during the last election campaign period, well before Trump won his second term.
But before you cut your losses and divest from them, note that these indexes have a history of bouncing back with a vengeance. Long-term data has indicated that the S&P 500 has never seen losses over a continuous 15-year period, and Trump only has four years in office. This underscores the importance of staying patient and invested, unless the investor’s risk tolerance, financial situation, and financial goals demand otherwise.
Amid all the volatility and market disruptions, some advisors and investors may point to the increasing price of gold. In fact, its prices were predicted early in the year to shoot up and gold prices reached an all-time high of $3,415.60 per troy ounce on April 21, 2025, but settled on $3,319.90 a couple of days after. Some advisors tracking the news and the markets predict that gold prices may go even higher in the coming months.
Although gold has traditionally been treated as a “safe haven” investment, it is not a low-risk one; it comes with higher risk since its price can be affected by many factors, especially market demand.
And unlike other investments, gold does not give out dividends or earn interest.
Investing in this precious metal can be part of a winning strategy for riding out the current volatility, if investors practice due diligence and invest with their risk tolerance, financial goals, and financial situation in mind.
A sound strategy would be to make gold take up a small percentage of your portfolio to increase diversification and cushion losses of other investments.
When it comes to investments, there are a few factors that portfolio managers must consider. This includes clients’:
risk tolerance – this can range from conservative, which is less tolerant of risk, to aggressive, which is more tolerant of investment risk
time horizon – depends on an investor’s investment goals, ranging from short-term, medium-term, and long-term
liquidity needs – this is the investor’s need for sufficient cash to meet financial obligations
age – can heavily influence an individual investor’s risk tolerance; the older the investor is, the more conservative they are; the younger they are, the less conservative they will be when it comes to investment risk
The importance of lower risks for investments becomes more serious if you or your clients use these investments as a source of income, especially if they’re in their retirement years. In cases like these, it’s best to actively seek out solid investments with the lowest risk, that provide reasonable returns. To help you choose among these investments and assemble a diversified portfolio, be sure to use our beginner’s guide to investing wisely.
With a slowing economy and an ongoing trade war stoking inflation, investors face various risks in 2025. Assembling a portfolio with a percentage of low-risk investments assets is invaluable for riding out the current volatility.
The possible tradeoff for investors who adopt this strategy is that they can expect lower returns over the longer term. However, this is a preferable situation for preserving capital and maintaining a steady stream of interest income rather than losing a large portion of your assets.
What do you think of investing in the low-risk investments we listed? Tell us which of these investments you are considering in the comments
As Commonwealth advisors weigh their futures following the firm’s sale, Summit Wealth Group is charting its own course as an independent RIA with $2.1 billion in assets, moving to SEI's custodian platform.
Toward the end of last year, UBS said it was redrawing its pay plan for advisors, but “every time one of the big firms like UBS tinkers with the advisors’ compensation, some of them say, that’s it, that’s the last straw,” recruiter Danny Sarch said.
Clients care less about returns than you might think.
From direct lending to asset-based finance to commercial real estate debt.
Wall Street ends mostly higher despite slowing economy
From direct lending to asset-based finance to commercial real estate debt.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
