Table Of Content
In 2025, with persistent inflation and market volatility in play, protecting capital while earning steady returns is more important than ever.
Low-risk investments can help you preserve wealth, generate income, and minimize exposure to major losses.
Below are some of the best low-risk investment strategies to consider this year, along with real-world scenarios and use cases.
1. Dividend-Paying Stocks: Income and Stability
Dividend-paying stocks remain a popular option in 2025 because they provide regular income even when markets underperform. These stocks are typically offered by companies with stable cash flows and strong balance sheets.
Steady Income Stream: When stock prices fall, dividends still provide returns.
Business Resilience: Companies like Johnson & Johnson or Coca-Cola have consistently paid dividends for decades, showing durability through past downturns.
Compounding Growth: Reinvesting dividends can help compound wealth over time—especially through a DRIP (Dividend Reinvestment Plan).
Lower Volatility: Compared to high-growth tech stocks, dividend payers often fluctuate less in price, providing a smoother ride for conservative investors.
You can invest in individual dividend stocks or choose low-fee dividend ETFs like the Vanguard Dividend Appreciation ETF (VIG) or Schwab U.S. Dividend Equity ETF (SCHD) to reduce company-specific risk.
Company / Fund | Type | Key Feature |
|---|---|---|
Procter & Gamble (PG) | Individual Stock | Stable consumer brand with consistent dividends |
Johnson & Johnson (JNJ) | Individual Stock | Healthcare giant with a long dividend history |
Coca-Cola (KO) | Individual Stock | Global beverage leader with steady payouts |
Vanguard Dividend Appreciation ETF (VIG) | ETF | Focuses on dividend growth companies |
Schwab U.S. Dividend Equity ETF (SCHD) | ETF | High dividend yield and diversified holdings |
2. U.S. Treasury Bonds: Government-Backed Safety
Treasury securities are some of the safest options available, particularly in uncertain markets. In 2025, Series I Bonds stand out because they are both inflation-protected and backed by the U.S. government.
Inflation Protection: Series I Bonds adjust semiannually based on the Consumer Price Index (CPI). For example, if inflation hits 4%, your I Bond interest adjusts upward automatically.
Capital Preservation: Investors use these bonds to preserve principal while earning modest, stable returns.
Market Volatility Hedge: Treasury bonds often rise when stocks fall. This was evident during the March 2020 market crash, when bond prices surged as investors fled risk.
Accessible to Individuals: You can buy Series I Bonds directly from TreasuryDirect.gov, with an annual purchase limit of $10,000 per person.
For those preferring liquidity, Treasury ETFs such as iShares U.S. Treasury Bond ETF (GOVT) allow exposure to a basket of Treasuries through any brokerage.
Bond / Fund | Type | Key Feature |
|---|---|---|
Series I Savings Bonds | Inflation-Protected Bond | Inflation-adjusted returns |
10-Year Treasury Note | Individual Bond | Safe long-term government debt |
iShares U.S. Treasury Bond ETF (GOVT) | ETF | Broad exposure to U.S. Treasuries |
Vanguard Short-Term Treasury ETF (VGSH) | ETF | Low duration, low volatility |
3. Precious Metals (Especially Gold): Real Asset Protection
Gold remains a time-tested safe haven, particularly during inflationary or crisis-driven environments. In 2025, demand for gold continues to rise due to geopolitical uncertainty and dollar weakness.
Crisis Hedge: Investors often turn to gold when equities dip or currencies weaken. In late 2023, gold hit all-time highs as inflation and global unrest surged.
Physical Asset Security: Unlike digital investments, gold is a tangible store of value that isn't dependent on the financial system.
Portfolio Diversification: Allocating a portion of your portfolio to gold can reduce overall volatility. For example, a 60/40 stock-bond portfolio may perform better with 5–10% exposure to gold during market downturns.
Multiple Access Points: You can invest in physical gold (via coins or bars), gold-backed ETFs like SPDR Gold Shares (GLD), or gold IRAs that allow tax-advantaged retirement exposure to physical precious metals.
Online gold and silver dealers such as SD Bullion and APMEX offer insured delivery and educational resources to help you get started.
Investment Option | Type | Key Feature |
|---|---|---|
SD Bullion (Physical) | Dealer | Buy coins and bars online |
APMEX (Physical) | Dealer | Large dealer with rare coin options |
SPDR Gold Shares (GLD) | ETF | Tracks spot price of gold |
iShares Gold Trust (IAU) | ETF | Low-fee gold exposure |
Barrick Gold Corp (GOLD) | Mining Stock | One of the world’s largest gold miners |
4. High-Yield Savings Accounts: Easy, FDIC-Backed Returns
High-yield savings accounts are among the simplest and safest places to park your money, ideal for short-term savings goals or emergency funds.
FDIC Insurance: Accounts at insured banks are protected up to $250,000 per depositor, making them nearly risk-free.
Higher Interest Rates: As of early 2025, some online banks like Ally Bank and Marcus by Goldman Sachs offer yields over 4%, significantly higher than traditional brick-and-mortar savings accounts.
Instant Access: Unlike CDs or bonds, funds in a savings account remain liquid and available whenever you need them.
Zero Market Risk: These accounts aren’t tied to market movements, making them ideal when uncertainty is high.
For example, if you're setting aside cash for a home down payment or upcoming tuition, a high-yield savings account ensures your funds remain safe and accessible while still earning interest.
Bank/Institution | Savings APY | Min Deposit |
|---|---|---|
Up to 4.00% | $100 | |
4.10% | $0 | |
3.50% | $0 | |
4.02% | $0 | |
4.20% | $100 | |
4.00% | $0 | |
3.50% | $0 | |
up to 3.80% | $1,000 – $5,000 |
5. Certificates of Deposit (CDs): Fixed Returns Over a Set Term
Certificates of Deposit provide guaranteed returns in exchange for locking in your funds for a period ranging from 3 months to 5 years.
Guaranteed Interest: CDs offer fixed interest rates, protecting you from falling yields in the broader market.
Flexible Terms: You can choose a term that matches your timeline, such as a one-year CD if you’re planning a large expense in 2026.
No Market Exposure: Your principal is safe from stock or bond market volatility.
Laddering Strategy: By spreading your investment across multiple CDs with different maturities, you can maintain liquidity while locking in higher rates on longer terms.
For example, a retiree might use a CD ladder to ensure predictable income every six months while still earning a competitive rate on longer-term certificates.
CD APY Range | Minimum Deposit | |
|---|---|---|
Marcus | 3.85% – 4.40% | $500 |
Barclays Bank | 3.00% – 4.00% | $0 |
Capital One | 3.60% – 4.20% | $0 |
Discover Bank | 2.00% – 4.20% | $0 |
CIT Bank | 0.30% – 3.50% | $1,000 |
Ally Bank | 2.90% – 4.00% | $0 |
Citi Bank | 0.05% – 4.16% | $500 |
Charles Schwab | 4.22%- 4.45% | $1,000 |
Synchrony Bank | Up to 4.35% | $0 |
6. Money Market Funds: Liquidity with Better Yields
Money market funds offer a mix of safety, modest returns, and fast access to your cash—making them especially useful in volatile markets.
Better Yields Than Checking: These funds often yield more than traditional bank accounts while keeping your money accessible.
Highly Liquid: You can typically withdraw your funds within one business day, which is helpful if you want flexibility.
Stable NAV: Most money market funds aim to maintain a $1-per-share price, minimizing price fluctuation risk.
Institutional Grade Holdings: Funds often invest in short-term, high-quality debt like Treasury bills or corporate commercial paper.
Fund | Type | Key Feature |
|---|---|---|
Fidelity Government Money Market Fund (SPAXX) | Money Market Fund | Low risk, daily liquidity |
Vanguard Federal Money Market Fund (VMFXX) | Money Market Fund | Strong yield, low expense ratio |
Schwab Government Money Fund | Money Market Fund | Available in Schwab accounts |
T. Rowe Price Cash Reserves Fund | Money Market Fund | Trusted fund with stable NAV |
7. Municipal Bonds: Tax-Advantaged Income with Low Risk
Municipal bonds (or “munis”) are issued by states, cities, or local governments to fund public projects. They’re especially attractive to investors in higher tax brackets because of their tax-exempt interest.
Tax-Free Income: Most muni bond interest is exempt from federal taxes, and in some cases, state and local taxes.
Low Default Risk: Investment-grade municipal bonds from well-funded states or cities are historically very safe.
Steady Cash Flow: Munis pay regular interest, making them appealing for income-focused investors like retirees.
Resilient in Recessions: Essential service providers (schools, utilities, infrastructure) often remain funded despite economic downturns.
For instance, a California resident investing in California-issued municipal bonds might avoid federal and state taxes on interest, boosting their effective yield.
Bond / Fund | Type | Key Feature |
|---|---|---|
iShares National Muni Bond ETF (MUB) | ETF | National muni bond exposure |
Vanguard Tax-Exempt Bond ETF (VTEB) | ETF | Tax-exempt diversified muni ETF |
Nuveen AMT-Free Municipal Bond Fund | Mutual Fund | Actively managed with no AMT |
BlackRock Strategic Municipal Opportunities | Mutual Fund | Flexible muni strategy |
8. Short-Term Bond Funds: Flexible Income with Reduced Risk
Short-term bond funds invest in fixed-income securities with maturities typically under three years. These funds are ideal if you want higher returns than a savings account but with less risk than long-term bonds.
Interest Rate Resilience: Because they mature quickly, these bonds are less sensitive to interest rate hikes.
More Yield Than Cash: In 2025, many short-term bond funds are offering yields over 4%, making them attractive alternatives to idle cash.
Diversification: Funds may include government, corporate, and asset-backed bonds—spreading risk across issuers.
Good for Near-Term Goals: Whether you're saving for a car, tuition, or business expenses, these funds provide income while keeping your principal relatively stable.
A real-world example: Investors nervous about locking money into a 10-year bond might choose a fund like Vanguard Short-Term Bond ETF (BSV) to stay flexible.
Fund | Type | Key Feature |
|---|---|---|
Vanguard Short-Term Bond ETF (BSV) | ETF | Diversified government and corporate bonds |
iShares Short-Term Bond ETF (SHV) | ETF | Low duration, low volatility |
SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) | ETF | Focus on Treasury bills |
Fidelity Short-Term Bond Fund (FSHBX) | Mutual Fund | Actively managed bond fund |
PIMCO Short-Term Bond Fund (PTSHX) | Mutual Fund | Flexible, risk-managed short bonds |
FAQ
A low-risk investment is one that has a relatively small chance of losing value. These typically include assets like government bonds, high-yield savings, and money market funds.
Yes, though the risk is lower, factors like inflation, interest rate changes, or credit downgrades can still cause small losses, especially in bond funds.
They can be, especially if your goal is capital preservation. However, they may not provide the high growth needed for goals like aggressive retirement savings.
Low-risk investments prioritize safety and stable returns, while high-yield options carry more risk for the chance of greater rewards.
It’s safe, but not always optimal. A balanced portfolio with both low- and moderate-risk assets is often better for long-term growth and protection.
Yes, many low-risk investments are taxable. However, some, like municipal bonds or Roth IRA holdings, may offer tax advantages.
Growth assets may outpace inflation, but certain low-risk options like I Bonds and TIPS also adjust for inflation, offering a safer hedge.
Absolutely. Treasury bonds, stable value funds, and money market options are commonly included in retirement accounts for stability.
Dividend stocks from blue-chip companies are relatively lower risk than growth stocks, but they still carry some market and company-specific risk.
They can help diversify a portfolio, but younger investors often need more growth exposure to build wealth over time.
Rebalancing once or twice a year is generally sufficient to ensure your risk exposure stays aligned with your goals.
