T he thought of low risk investments makes many people feel comfortable about their money. I remember the first time I stood at the top of the high dive at the rec center pool, I was a nervous wreck.

For many that have never invested before, they feel this same apprehensive feeling about where they place their money. High rates of return on your investments are wonderful because it means you don't have to invest as much capital to reach your investing goals. Yet, the higher return you want, the more risk you'll have to accept.

Though with this anticipation of investing, it really has never been as easy with such online brokerage accounts to help you know what is best for your financial situation, such as Betterment Investing , to help you take your next steps.

Wendy Kirkland

If you find yourself in this camp, you may need to shift a large portion of your portfolio to low risk investments — or even look for ways to earn a decent return with no risk at all. Here are a few of your best low risk investment options to consider for your portfolio — along with some ideas to earn cash with almost no risk at all. If you screen your loans well and avoid some of these defaults, then you can earn some really nice returns. I had one friend make a 5, dollar investment in Lending Club and was able to buy into different loans.

Now that is diversification! If lending money on the internet sounds scary, you can rest assured it isn't. Lending Club in particular has done a great job in setting up their collection practices in order to protect their investors. Lend Academy did a great interview with LC's Head of Collections.

Learn more about how I did with P2P lending in my review of LendingClub or Prosper or get started with Peer-to-Peer Lending with companies like Lending Club and Prosper. Depending on your appetite for risk and how much capital you have to invest, you could score some decent returns without the stress that comes with high risk investments. The idea that credit card rewards could provide a low-risk return on your money might sound preposterous, but it's not that off the wall when you really think about it.

Redeem your point for statement credits or gift cards, or use them to shop directly on Amazon. With this new card option, you'll earn an unlimited 1. If you don't like keeping track of rotating categories, this card is an excellent alternative. Best of all, there is no annual fee. If you want to learn more about the easy money you can score with credit card rewards, check out our guide on the best cash back credit cards. These investments are probably some of the most boring things you can do with your money, but if you are looking for the lowest possible risk, then this is where to go.

If you're looking for a risk-free way to earn some interest on your money, a high yield savings account might be your answer. With these accounts, you'll earn a nominal amount of interest just for keeping your money on deposit. Other than opening your account and depositing your money, this strategy requires almost no effort on your part, either. The best high yield savings accounts offer competitive interest rates without charging any fees.

When choosing an account, you'll also want to look for a bank with a good reputation for providing quality customer service, easy access and online account management, and easy deposits.

If you're interested in my thoughts on which bank to go with, check out this post:. One of the lowest risk is called Treasury Inflation Protection Securities, or TIPS. These bonds come with two methods of growth. The first is a fixed interest rate that doesn't change for the length of the bond. The second is built-in inflation protection that is guaranteed by the government. Whatever rate inflation grows during the time you hold the TIPS, your investment's value will rise with that inflation rate.

For example, you might invest in a TIPS today that only comes with a 0. That's less than certificate of deposit rates and even basic online savings accounts. TIPS can be purchased individually or you can invest in a mutual fund that, in turn, invests in a basket of TIPS. The latter option makes managing your investments easier while the former gives you the ability to pick and choose with specific TIPS you want. The fund also tries to pay out a little bit of interest as well to make parking your cash with the fund worthwhile.

These funds aren't foolproof, but they do come with a strong pedigree in protecting the underlying value of your cash. When a government at the state or local level needs to borrow money, they don't use a credit card. Instead, the government entity issues a municipal bond. These bonds, also known as munis, are excempt from Federal income tax, making them a smart investment for people who are trying to minimize their exposure to taxes.

Most states and local municipalities also exempt income tax on these bonds, but talk to your accountant to make sure they are exempt in your specific state.

What makes municipal bonds so safe? Not only do you avoid income tax which means a higher return compared to an equally risky investment that is taxed , but the likelihood of the borrower defaulting is very low. There have been some enormous municipality bankruptcies in recent years, but this is very rare. Governments can always raise taxes or issue new debt to pay off old debt, which makes holding a municipal bond a pretty safe bet.

US Savings Bonds are similar to Treasury Inflation Protected Securities because they are also backed by the United States Federal government. The likelihood of default on this debt is microscopic which makes them a very stable investment. Series I bonds consist of two components: They are somewhat similar to TIPS because they have the inflation adjustment as part of the total return. The fixed rate never changes, but the inflation return rate is adjusted every 6 months and can also be negative which would bring your total return down, not up.

Series EE bonds just have a fixed rate of interest that is added to the bond automatically at the end of each month so you don't have to worry about reinvesting for compounding purposes. Rates are very low right now, but there is an interesting facet to EE bonds: That equates to approximately a 3. If you don't hold to maturity you will only get the stated interest rate of the bond minus any early withdrawal fees. Another bonus to look into: Annuities are a point of contention for some investors because shady financial advisors have over-promoted them to individuals where the annuity wasn't the right product for their financial goals.

Annuities are complex financial instruments with lots of catches built into the contract. Before you sign on the dotted line, it's important to understand your annuity inside and out. They're taking a lump sum of cash from you. In return, they are giving you a stated rate of guaranteed return. Sometimes that return is fixed with a fixed annuity , sometimes that return is variable with a variable annuity , and sometimes your return is dictated in part by how the stock market does and gives you downside protection with an equity indexed annuity.

If you are getting a form of guaranteed return, your risk is a lot lower. Unlike the backing of the Federal government, your annuity is backed by the insurance company that holds it and perhaps another company that further insurers the annuity company. Nonetheless, your money is typically going to be very safe in these complicated products. Another controversial investment is cash value life insurance.

This insurance not only pays out a death benefit to your beneficiaries when you die like a term life insurance policy , but also allows you to accrue value with an investment portion in your payments. Whole life insurance and universal life insurance are both types of cash value life insurance. While term life insurance is by far a cheaper option, it only covers your death. One of the best perks of using cash value life insurance is the accrued value can not only be borrowed against throughout your life, but isn't hit with income tax.

While cash value life insurance isn't for everyone, it is a clever way to pass some value onto your heirs without either side being hit with income tax. Here are a few investments to consider to add a bit more risk to your portfolio. One of the easiest ways to squeeze a bit more return out of your stock investments is simply to target stocks or mutual funds that have nice dividend payouts. A safer bet would be to invest money into a dividend stock mutual fund.

With this type of mutual fund, the fund company targets stocks that pay nice dividends and does all of the work for you. You also get diversification so that one or two stocks can't tank your entire investment.

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Adding on to the dividend stock theme is preferred stock. Preferred stock is a type of stock that companies issue that has both an equity stock portion and a debt portion bond.

Preferred stock are not traded nearly as heavily as common stock, but do have less risk than the common stock. It is just another way to own shares in a company while getting dividend payments. Now that we've talked about some low risk and middle-of-the-road investments to consider, let's look at a few investments that come with absolutely no risk at all. While you may not earn a ton of interest with any of these options, you won't have to worry about losing a cent of your initial investment.

And if you're nearing retirement or already there, that extra peace of mind might be worth it. If you're in the market for one of these low-risk investment vehicles, you can get one through your bank, credit union, or even through your investment broker.

You are locked in until maturity of the term length, although you can usually choose to withdraw from the CD early for a penalty that is normally equal to 3 months' worth of interest. How much interest you earn is dependent on the length of the CD term and the current interest rates when you purchase your CD. Interest rates are generally fairly low at the moment, but you can usually get more interest if you get a certificate of deposit for a period of at least years.

Just like high yield savings accounts, online checking accounts let you earn small amounts of interest on the money you deposit. If you're going to park your money in the bank anyway, you could surely appreciate earning some interest along the way.

Best of all, many online checking accounts charge zero or minimal fees to get started. When looking for an online checking account that actually lets you earn interest, look for a bank with excellent customer service, a user-friendly online interface, and competitive interest rates.

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If you want utmost flexibility, it's also important to seek out an account that doesn't impose account minimums or deposit requirements. And if you want to withdraw money frequently, you'll want to make sure you have access to local, no-fee ATMs as well.

If you want to learn more about our suggestions for the top online checking accounts, check out this post:. If you have some extra money you won't need for a while, you can occasionally earn some free cash with a bank bonus.

Most banks will offer a bonus as an incentive for you to sign up, and these bonuses can be worth several hundred dollars on their own. Bank bonuses are sometimes regional, however, and can depend on the local banks in your area and the products they offer. In exchange for your bank bonus, you'll be asked to keep your money on deposit for anywhere from 6 to 18 months.

In addition, you may have to set up direct deposit to your new account, or use a bank-issued debit card for a certain number of transactions within the first few months. Just remember to read through all the fine print to learn about any fees that might be levied and how you can avoid them.

By jumping through these hoops, you can usually earn a few hundred dollars for your efforts. And if you decide not to keep the account for the long haul, you can always close it once you earn the bonus and meet all of the bank's requirements. As you get closer to retirement, it's important to reduce your risk as much as possible. You don't want to start losing capital this late in the game; since you have many years of retirement ahead of you, you want to preserve your cash.

The best low risk investments can help you do just that. By letting you earn nominal amounts of interest on your money with little risk, you can help your nest egg keep up with inflation without losing your shirt.

Just remember to read the fine print and educate yourself along the way. Our FREE Money Dominating Toolkit, and two chapters of my Best-Selling book: Soldier of Finance will get you on track to reaching your financial goals.

April 2, at 1: I work and save in bank without interest. Please can someone tell me where to invest around the world without risk or low risk. April 22, at 7: Hi Godwin — You might seriously look into high yield accounts with online banks, like Ally Bank. February 22, at Jeff, Your website is excellent for those who has no much idea like me in investing money. Thank you very much. February 24, at 9: Jeff, looked into P2P a while back. I think it was Lending Club. Can you help with this?

What if I wanted to invest 50k, k? Is that possible with P2P? And I think some states were excluded, but not mine. April 23, at 1: Hi Sen — That limit is a state law limit, not a Lending Club limit. This page from Lending Club says the following:. Please see our State and Financial Suitability Policy for more details. January 20, at I am truly astounded to see cash value insurance on here.

You also fail to mention that cash value is lost upon payment of death benefit or visa versa. January 21, at 6: January 4, at 9: I am so confused!

I am a doctor who cannot get ahead of the interest on my education loans. The amount I owe is snowballing and it wakes me up at night in a cold sweat. Where do I begin? January 9, at 1: Hi Monica — Since you are earmarking savings to payoff debt, you should be as conservative as possible with your investments.

CDs would probably be the best choice. Brent Hayes Prenton says. January 2, at 5: January 4, at What I mean that is the advisor could be quoting you 1. February 20, at 9: Are you a broker yourself? None of my business but I am curious to ask this question. I am looking to invest with a handful maybe less of trusted individuals so that we could all capitalize equally and distribute the take when reached at a certain amount goal. What would be the best option to take here?

I am looking to invest and have a generous return from the market in which I invest. The point of this is however, who or what or where do I we invest the funds in to seek back a return? For me personally I am looking to pay off some debt I have and invest in buying a home in the next 5 years. March 2, at 8: Hi Tim — You really need to sit down with that group of individuals and have a consensus as to where you want to invest. January 9, at But you can do a lot better than that.

For example, Betterment will manage your account for as little as 0. November 16, at 7: Peer to Peer lending is the best utilization for your money if you are investor and best source of funding if you are Borrowers. It provides a platform where an investor can fund the borrowers without going through the traditional banking system.

February 2, at 9: I need to do a better job with due diligence some times. January 9, at 6: Did I mention something about this in the podcast? I was sharing some of my bad investments not anything I made money on in the past 5 years. January 10, at Hi Jeff, there is a relation to why i reference 5 years. I listen to all your podcast not just here but at Todd Treissder and Entrepreneur on Fire and that i know you are pretty big on active management and peer to peer lending.

Roger The Chicago Financial Planner says. July 17, at 8: Nice post and a helpful list. I sure you noticed but TIPs funds really got slammed in Q2, a bit of an over reaction to the Fed, but none the less TIPs have done better over the past several years than the underlying economics of the instruments might suggest.

July 17, at 6: I too am interested in P2P lending. I guess I will have to get up off my butt and give it a chance vs. July 14, at Really helpful post, thanks Jeff! Sean One Smart Dollar says. July 11, at 7: I really need to start with P2P lending. It has just been tough for me to stop putting money into the stock market the last couple of years.

January 11, at 5: Good day sir, I have been following your post for quite some time now and honestly speaking,am beginning to have a better understanding about the world of investment. January 19, at 2: You mentioned steady growth within a year or less. You can try to pick individual, undervalued stocks and sale when the price goes up, just beware of the risk involved and manage your account with any one of the many online broker site that were designed for such things.

Aside from that, you should get in the habit of saving and not living beyond your means. Long term goals and then working backwards to put a plan in place to achieve those goals is the name of the game. Diversify and protect yourself along the way.

January 2, at US SAVINGS BONDS via http: Even the parents tend to shy away from using as is so complicated. I must adminth The Wizard was of benefit in capturing the data. However, if a wrong date of purchase is entered, Treasury Direct is not set up to detect this. Though it will detect if Bond does not match the Type or Denomination. USE CAUTION WHEN ENTERING YOUR DATA. November 19, at 1: November 21, at 8: November 19, at Jeff, I am glad you included p2p lending on this list as a middle risk investment and thanks for linking to my article by the way.

Peter The more I dig into p2p lending the more I get excited about it. Especially considering the recent pull-back in the market. For my clients that are more online savvy, I encourage them to at least look at and consider p2p lending as a part of their portfolio. October 17, at 7: Just how volatile have the markets been the last two months? Would you be surprised to know that August and September rank amongst the top 5 most volatile periods in the last 50 years?

Check out — http: John Van Winkle Insurance Group says. October 15, at 5: Keep up the goof fight Jeff and Miranda! October 13, at 9: Thinking long term is important, especially if you are dealing with a retirement account. Creating a long term plan that fits your risk is key. October 13, at 2: October 13, at October 12, at 8: As always, good advice Miranda! Your email address will not be published.

Notify me of followup comments via e-mail. Get FREE access to our Money Dominating Tool Kit, and 2 chapters of my best selling book: Registration does not imply a certain level of skill or training. The presence of this website on the Internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute.

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If you screen your loans poorly, peer to peer lending can be extremely risky. However, screening properly and choosing only the best rated loans is a great way to secure a decent return with little risk on your part.

Want to protect your portfolio from inflation? While you may not earn a lot of interest on your investment, you won't have to worry about losing vast amounts of your principal or the day-to-day fluctuations in the market. Looking to purchase some Series I or Series EE Bonds? You can do that directly through TreasuryDirect. Want to add some dividend paying investments to your portfolio? Earn a risk-free return on your cash with a Certificate of Deposit. There was an error submitting your subscription.

Online Broker Comparison — Which Online Broker Should I Open an Account With? Reader Comments Godwin says April 2, at 1: This page from Lending Club says the following: Jeff, Are you a broker yourself? I am currently 31 years of age and wished that I have done this years ago. Sometimes we have to concede that we are just not good enough active managers around. Recent international political instability, it is very risky.

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