What are some low-risk forms of investment?


Quick Answer

Some low-risk investments include certificates of deposit, treasury inflation protected securities, or TIPS, and money market funds, according to Forbes.com. These investments generate lower returns because the investor is not taking many risks, but capital preservation is more a priority when choosing these investments.

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Full Answer

With a certificate of deposit, an investor deposits funds in a financial institution for a predetermined amount of time in return for a fixed interest rate until the certificate matures, explains Forbes.com. There is little risk in this investment because as long as it is done with an institution insured by the Federal Deposit Insurance Corporation and the deposit is under $250,000, the investor is guaranteed to get the principal back.

TIPS bonds from the U.S. Treasury are available with two types of growth options, Forbes.com states. The first option is through a fixed interest rate that remains the same throughout the length of the bond, and the second option is through a built-in inflation protection guaranteed by the government. TIPS can be purchased individually or through a funds that own a set of TIPS.

A money market fund is a type of mutual fund with the main objective of not losing any of the initial investment, states Forbes.com. Money market funds pay small amounts of interest to attract investors, but their main lure is their relative risk-free growth potential.

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