In an ideal world, investors look for investments that provide high returns and low risk. However, investments with high returns are often associated with increased risk and vice versa.
1. High Yield Savings Accounts
High yield savings accounts are great if you’re saving up for something big or if you’re temporarily storing the cash you earned with your high-income skills.
2. Certificates Of Deposits
Certificate of Deposits (CD) are closely related to the savings accounts but have higher interests. The FDIC also insures Cds. That means they are practically risk-free.
Their advantage is that they are usually very liquid.
3. US Savings Bonds
US savings bonds have one of the lowest investment risks. The US treasury issues the securities to fund the government’s operations. Saving bonds have a fixed rate of interest.
Money market accounts are closely related to savings accounts and CDs. They often have a better rate than the savings accounts but have more liquidity than CDs.
Municipal bonds are loans issued to local governments by investors. These are usually a good option for better returns with slightly higher risks than savings accounts, CDs, or saving bonds.
6. Money Market Funds
Money market funds are a kind of mutual fund investing in short-term debt instruments, cash, and cash equivalents. Money market funds or money market mutual funds offer a low level of risk with pay-out in the form of dividends.
7. Annuities
Annuities are simply insurance contracts. You pay a certain amount of money today, and you get a stream of income in the future. That is why annuities are best suited for retirees looking for a guaranteed income for life.