Best Low-Risk Investment Strategies
Best Low-Risk Investment Strategies Photo by Katie Harp on Unsplash

Investing is like gambling; your chances for loss all depend on the game you're playing. It's a risky business, even with investments that guarantee a return principal. But instead of going for the high-stakes games like baccarat, choose a penny slot. You can still see substantial yields by venturing into specific low-risk investments.

Generally, such investment strategies ensure you don't lose the principal sum. They also earn high-interest rates. Are you possibly considering taking chances with this kind of risk investment strategy?

Here are eight low-risk investment options that can work wonders if handled well.

7 Practical Low-Risk Investment Strategies


1. Bank Savings

Keeping money in your savings account is a worthwhile low-risk investment strategy. With a savings account, you can control how it fluctuates. Even if you lose money, it'll happen on your time if you make withdrawals. Whether the annual interest rate is worth it is up to how badly you want to accrue interest.

Think of it this way. With a savings account, you're likely to lose only 2% purchasing power on1% interest with a 3% annual inflation rate. If you prefer to access your account at all times, this's the best option for you.

2. Fixed Annuities

Would you consider fixed annuities a sound investment strategy? Fixed annuities do work exceptionally well if you're interested in a safe, low-tax plan that earns a guaranteed retirement return.

One great thing about such an investment strategy is that it acts more like insurance; you buy it to reduce risks. If you have a well-defined retirement goal, fixed annuities will prove best. You merely need to understand how it works with income tax, investment options, and how the strategy complements other investments.

3. Certificates of Deposit (CDs)

Some still consider CDs as one of the safest investment options. Certificates of Deposit (CDs) is a savings account with a fixed amount of money for a specific period (like six months or a year). How does it work? Generally, when you cash in or redeem your CD, you're guaranteed to get the original investment amount; you also get back the interest. Try CDs if you are seeking a place to keep your money for a future purchase.

4. Dividend-Paying Stocks

True, while stocks aren't usually as secure as cash, they are generally less risky than other investment strategies, including venture capital, options, futures, or precious metals. This owes to the fact that dividend stocks pay a cash dividend. Thus, they typically limit volatility without eliminating it. And such dividend stocks may fluctuate with the market trends without falling as far.


You can benefit in two ways if you invest in a dividend-paying stock. This is either through appreciation in the store's price or distributions made by the company. Since companies pay dividends every quarter, such an investment strategy is a sure source of income.

5. Index Funds

An index fund is a mutual fund with holdings that match a particular market index. Index funds attract many investors due to their low cost and effective investment strategy. It doesn't take too much research to learn how to invest in index funds. You only need to pick the right investment account, select an online broker, and determine your initial deposit. You'll then have to choose your blend of investment vehicles before setting an ongoing maintenance strategy.

6. Corporate Bonds

High-grade corporate bonds are the best investment strategy if you are ready to accept a slightly higher risk for higher yields. A corporate bond issued by a well-established and high-performing company offers relatively higher returns than Treasuries or money market accounts.

Usually, investing in corporate bonds come with benefits. Due to the short redemption period, such bonds are less vulnerable to inflation. They also guarantee a higher growth potential; this is rare with similar low-risk investment strategies.

7. Common Stocks that Pay Dividends

Interestingly, you can earn profits by buying stocks at a throwaway price then selling at a higher price. You can also make dividends. Although many young companies don't pay dividends, most established companies share some essential tips. This owes to the set limits on how large a company can grow. Thus, most companies pay dividends to maintain their stock.

Should you worry? Not at all. You can get benefits from common stocks that pay dividends. Such dividends provide a better income than what price-alone providers offer.

Moreover, if the stock market declines, it won't affect your payment. Furthermore, your dividend will still maintain the stock price even when the market is down. Ultimately, the bonuses and capital gains of dividend-paying stocks often exceed supplies that do not pay dividends. No wonder dividends commonly account for some 40% of the stock market's total return.


8. Preferred stock

As you know, Preferred stocks are securities representing ownership in a company. The stocks have a priority claim over the company's common shares on assets and earnings. Overall, holders of preferred stocks enjoy more priorities than those of common stocks (in terms of dividend payments). Even if your company misses a dividend payout, it will still pay you the arrears before it pays the common shareholders.

Are you still undecided about whether to invest in preferred stock? Keep in mind that, just like a bond, preferred stocks will earn shareholders a regular cash payout. Even when the company undergoes liquidation, you'll still have a claim to the company's assets and earnings. And during better times, the money will typically flow to investors. This is especially true when the company boasts extra cash.


These practical strategies will go a long way in helping you plan for the years of retirement ahead. To get more information about these fantastic income-producing investments, consult a qualified financial adviser. With such tried and tested strategies, you're guaranteed to secure your future better.