10 Best Places to Invest Money Without Risk in 2024

While it's true that no investment is entirely without risk, there are many options available that offer low risk and can suit your financial goals.

In this article, we'll guide you through a variety of low-risk investment opportunities and strategies to minimize risks.

Our aim is to help you make informed decisions that align with your comfort level and investment objectives, ensuring a more secure and positive investment experience.

What Are the Best Places to Invest Money Without Risk?

While there is no such thing as a no risk money investment, there are various means of reducing risk when investing money.

Here are several ways of reducing or maximizing your chances of securing a no-risk money investment.

1. High-Yield Savings Accounts

A high-yield savings account is exactly as it sounds.

It is a savings account that offers higher interest levels so that you are earning more on money that you leave in your account.

These are essentially no risk investments, and you can usually access your money whenever you want, but there may be financial penalties. The return might not be as high as in other investment opportunities.

Different financial institutions offer different accounts and rates, but make sure you are putting your money somewhere with FSCS protection (or the equivalent) just in case something catastrophic happens to the bank.

2. Series I Savings Bonds

For US investors, the Series I savings bonds are issued by the government, and they adjust for inflation.

There is no risk of default, but you are limited to $10,000 in any calendar year. You can earn interest on it for 30 years, but if you redeem it before five years, you will incur an interest penalty.

3. Short-Term Certificates of Deposit

These are like the high-yield accounts in as much as they are loss-proof in FDIC-backed accounts, but if you take money out of the account, there are penalties.

Short-term CDs offer a set rate of interest over a set length of time, usually between six months and five years.

4. Money Market Funds

Money market funds are pools of CDs, short-term bonds, and other low-risk investments, often grouped together to create a diverse portfolio and mitigate risk.

These are sold by brokers and mutual fund companies, and you can usually take money out of them whenever you want without penalties. They are considered to be pretty safe but with more risk than a HYSA or CDs, with a return profile to match.

5. Treasury Bills, Notes, Bonds and TIPS

Government-backed investments are considerably less risky than anything corporate or market-based. Treasury bills, notes, and bonds are essentially the same thing. The only difference is the term until they mature.

Bills mature up to a year, notes in ten years, and bonds in 30 years.

TIPS works similarly to Series I Savings Bonds – the value moves with interest rates.

6. Corporate Bonds

Corporate bonds are riskier than government-backed bonds, but this also means that they can have a higher yield.

You can buy bonds through a broker, and the highest-yielding bonds are considered to have a risk-to-return profile more like stocks.

7. Dividend-Paying Stocks

Dividend stocks are essentially the same as normal stocks, but they pay regular cash dividends, making them less volatile than other types of stock.

Although they are not as safe as government-issued assets, the companies that offer them tend to be more stable. However, losses can impact dividend payouts.

8. Preferred Stocks

Preferred company stocks act more like lower-grade bonds, but they do react to fluctuations in the market.

Preferred stocks make regular payouts to investors, so they are a good option for creating passive income. While they might have more cost associated with them, they could be a better investment.

With all this in mind, preferred stocks are often referred to as hybrid securities as they are somewhere between a normal stock and a bond.

9. Money Market Accounts

Money market accounts are essentially the same as a high-yield savings account, but they work more like a current account, so you can get a debit card and use it in the same way as you would an everyday account.

You will have the flexibility to spend when you want, but you might have to use a higher initial deposit to get started.

As there is no investment as such, inflation can reduce the spending power of your capital if it outpaces interest.

10. Fixed Annuities

A fixed annuity is a contract that pays a certain level of income over a period.

You usually make an upfront payment to an institution, usually an insurance company. Then, you can add lump sums or pay over time throughout the set period.

Fixed annuities can provide a guaranteed return and often include other benefits, but they can be complex, and you will probably need financial advice.

Why Invest?

Investing is essentially putting your money to work, using it to buy assets with the intention of making it grow over time.

Investors aim to generate profits (known as 'returns' in investing) above their initial funding.

They do this by purchasing assets like commodities, currencies, stocks and shares on the financial markets.

Investing in the right places can be an effective way to put your money to work, and that is why many different people make investment decisions.

Some people make investments part of their retirement plans. Long-term investment portfolios are often part of a pension fund or other future planning.

Others might want to reduce the impact of inflation on their savings by growing profit over the rate of inflation and reducing the impact of reduced buying power that can happen with long-term savings.

Other reasons to invest include building savings pots for things like college and university, generating passive income, and even just supporting preferred brands and businesses.

There is a choice of ways that you could invest; some popular financial instruments include:

• Stocks
• Bonds
• Options
• Futures
• Mutual Funds
• Commodities
• Currency
• Small Businesses
• Real Estate

To decide which type of investment you should make, you will want to consider your goals and the time limit in which you want to reach them.

Your planning might be short-term, medium-term, or long-term, and that will affect the choice you make in what to invest in.

What Makes a Great Investment?

A great investment means different things to different people, and there are a few things to consider when you are choosing where to spend your money.

What counts for every investor is that the investment is:

• Suited to your financial goal
• At an acceptable risk level
• Able to increase your net wealth over time.

Length of Time

How long are you planning on holding your investment portfolio?

Some types of investments are set up to be held for at least a specific period, which means your investment is tied up for that period, and early cashing out can incur financial penalties.

If you are investing to make money for a short-term goal, you might want to consider a high-interest savings account instead, as there are fewer penalties for accessing your money.

Fair Value

The cost of investing is not limited to your initial funding; some investment companies and brokerage accounts might have fees and charges to be paid based on your portfolio.

You also want to know that the buy price of whatever you are investing in is fair and reasonable – and is likely to increase.

Fractional Shares

Some investment brokers offer fractional shares and other low-cost investment opportunities, which can help you get certain assets that you might not be able to afford otherwise.

For example, the share price of a big-name blue-chip company like Amazon might make it difficult for you to afford to buy one full share.

Still, you can buy a fractional share (which will sell at a fractional price and bring in fractional dividends if relevant).

Easy Access

This isn’t necessarily about the asset to invest in, but it is related to the safety and security of your portfolio. To be able to invest, you need to have access to the financial markets, which means you need a broker.

You will probably want to invest online rather than have face-to-face meetings with a wealth management company.

A good investment will be one that you can make, with the right information and research, online or even from your smartphone.

Understanding

The last thing to think about when making a smart investment is to choose something that you know about.

This might not seem all that relevant, but buying shares and even bonds means putting your faith in the performance of a company and of the financial market as a whole, so the more you know and understand about the business, industry and wider economic market, the better.

What Are the Risks of Investing?

Before we look at the difference between low-risk and no risk investing, it is important to ensure that you know what the risks are when making investments and building a portfolio.

First, you must always remember that there is no such thing as risk-free investing.

Many of the no risk investment strategies that are mentioned are, in fact, just saving.

You might make some money from interest on the money in the account. Still, your capital is not at risk (if you are saving with a bank or financial institution that is protected by a body like the FCA or FSCS).

No investment is guaranteed to make money, whether over the short term or the long term.

All investments pose a risk to your capital, meaning you could lose not only the opportunity for profit but also the money that you started with.

Some of the risks that come with investing include:

• Liquidity risk – A company doesn’t have enough cash to meet its financial commitments (such as paying dividends or returning bond values
• Market risk – Things that can affect the performance of the market, such as changing interest rates
• Specific risk – Problems that might only affect certain companies or sectors of the market, like weather disruption or manufacturing shortages
• Systemic risk – Changes or events that can affect markets and economies, like political upheaval or economic crises

These might only cause problems for your investments in the short term, or they might cause problems in the longer term, too, affecting not only the returns on your investment but also the capital you used to create your portfolio in the first place.

You can mitigate these risks to your investments in several ways. One of the most effective ways to do this is to diversify your portfolio.

By investing in several different asset types, different industries, and market sectors, or even across different financial markets, you can build a portfolio that will contain assets that might grow while others fall, making the risk more spread out.

Other ways you can mitigate it is by investing in assets that are considered to be low risk.

Difference Between Low Risk and No Risk

No Risk Investment

As previously mentioned, there is no such thing as investment without risk.

However, you can choose to put your capital into high-interest savings accounts, which usually means your money will be earned without risking the capital.

Still, these will not yield as much in return as other forms of investment.

Low-Risk Investing

Low-risk investing means looking at assets that are considered to be relatively safer.

These assets might not yield large rewards but are less likely to end with you losing all your capital.

Assets in this class might be things like government bonds or blue-chip stocks.

Frequently Asked Questions

Final Thoughts

Investing in the right assets and building a diverse portfolio can be a good way of putting your money to work, but it is up to you to choose the right vehicle for your investment goals.

Whether you are looking to provide an income in the future after retirement, you want to build a college fund or a nest egg, or you just want to make passive income from dividends, you need to know your goals and how much time you want to invest.

Investing comes with risk, and there are no guarantees that you will make money. In fact, you could lose it all.

Choosing low-risk opportunities is one of several ways to mitigate these risks.