Top 10 Low-Risk Investments For Retirement

Written by Banks Editorial Team
4 min. read
Written by Banks Editorial Team
4 min. read

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Investments are a common path to wealth and allow your money to work for you. While a bull market carries most portfolios higher, a bearish outlook can result in losses. Younger investors can ride the volatility, but older investors prefer stability, especially as they get closer to retirement. Safe assets still provide a return on your money and can generate enough cash flow to help you cover expenses. Titan can make it easier to access low-risk investments. They professionally manage your money, but some investors want to take a DIY approach. We will cover several low-risk assets that generate returns without dramatic price swings.

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How Can Low-Risk Investments Help Your Retirement?

Investors rely on their capital after retiring from their jobs. Without job security, retirees tap into their fortunes to cover living expenses. A sudden 20% portfolio drop can put many retirees’ plans in flux and create significant financial challenges. Low-risk investments barely move and have strong foundations to weather market conditions. These assets give retirees the benefit of additional funds without high risk.

The Top Low-Risk Investments for Your Retirement

It’s natural for investors to reallocate their portfolios as they get closer to retirement. These low-risk picks offer price stability and recurring cash flow.

1. High-yield Savings Account

A high-yield savings account doesn’t generate the highest returns, but it’s risk-free money. The bank pays interest to customers who keep their money in their accounts. While almost every account provides some interest, you can get higher payouts with a high-yield savings account.

2. Certificates of Deposit

CDs offer higher returns than high-yield savings accounts and follow the same model. These certificates provide a risk-free way to generate returns. The key difference is that you must commit to not touching the money for the CD’s term. You can increase your returns with a longer CD term. Extending the CD’s term further delays your access to the funds, but you get a higher interest rate. Customers can take funds out of their CDs, but that would result in fees that wipe away the profits. Only put money in a CD if you do not need it for the duration of the CD’s term.

3. Money Market Funds

Money Market Funds are like index funds, but they contain low-risk assets such as short-term bonds and CDs. You can compare the performance of money market funds and pick the best one instead of researching various CDs and bonds. Money market funds simplify the path to low-risk assets.

4. Treasury Securities

Treasury securities are some of the safest investments since the government backs them. However, you will receive interest payments for holding onto your treasury bills and the principal at the end. While it’s unlikely that the government will struggle to keep up with T-bills, they can print more money to compensate for the debt. 

5. Dividend-Paying Stocks

The stock market has produced long-term returns that significantly exceed what you can get from money market funds and bonds. Higher returns require a greater risk tolerance, but dividend stocks let you strike a middle ground. Dividend-paying companies are often in the mature stages of their growth. Their stock prices can fluctuate, but you won’t see as much volatility as growth stocks. While waiting for the price to play out, you will receive quarterly or monthly dividend payments for holding onto those stocks.

If you look at dividend stocks through an investment app, don’t chase yield alone. Some companies have dividend yields over 5% but can generate long-term losses. AT&T is a perfect example of this trend. While a 6% dividend yield sounds enticing, the stock has fallen over 35% in the past five years. Conversely, companies with high dividend hikes, respectable earnings, and revenue growth will perform better in the long term and reward patient investors with attractive cash flow.

Get Expert Help To Manage Your Portfolio

Get $10 when you open an actively managed individual or IRA account. Diversify your portfolio with personalized recommendations based on your investment goals.

6. Real Estate Investment Trusts

REITs are similar to dividend stocks. Both give you exposure to assets that carry some risk, but most of these assets do not have the same volatility as growth stocks. REITs let you invest in a basket of real estate assets. Some REITs specialize in multifamily homes, while others have large positions in industrial and commercial real estate. REITs must pay 90% of their taxable income to shareholders. If the company continues expanding cash flow each year, you will receive higher dividends. You can either cash out on those dividends to cover expenses or reinvest them to increase the upcoming dividend payout.

Many investors view real estate as a hedge against inflation. Real estate is a tangible asset that always has value, and it has a limited supply. These dynamics help real estate perform better during inflationary environments than high-growth assets. Real estate prices can take a hit from time to time, but people always need a place to live and store inventory. Some investors believe crypto investing has the same dynamics and acts as an inflation hedge, but it is a riskier asset than REITs. You can get more stable returns with REITs, but crypto presents a riskier proposition for a higher potential reward. Titan allows its customers to invest in crypto or REITs.

7. Fixed Annuities

Insurance companies offer fixed annuities for investors who want reliable monthly payments. You have to invest some capital into the annuity first, but the monthly payments will exceed the principal. You get a guaranteed return and can continue putting money into the annuity. Most annuities have lengthy contracts, such as a 20-year commitment.

8. U.S. Savings Bonds

U.S. savings bonds are government-issued debt that offers low returns but virtually zero risk. These bonds have lengthy maturity windows, with some maturing in 20 years. Some investors won’t mind the long duration because of the tax benefits. Proceeds from a U.S. savings bond are tax-free at the state and local levels.

9. Corporate Bonds

The U.S. government isn’t the only entity that needs your money. Many companies issue corporate bonds to raise cash for upcoming initiatives. Corporate bonds have higher yields than treasury bills, but they have some risk. For example, a company can go out of business before fully paying bondholders. During this scenario, bondholders are first in line to receive any remaining funds, while stockholders get the lowest priority. Investing in stable, growing companies will reduce your risk, but you may also receive less interest for incurring a lower risk.

10. Stable Value Funds

Stable value funds are an option for investors who are part of a 401(k) plan. Banks and insurance companies issue these short-term accounts that let you collect interest.

Use a Team of Professionals to Mitigate Your Investment Risk

Investors can select from numerous assets to fortify their finances and accumulate low-risk returns. However, it takes time to find these assets and discover the most optimal investments for your portfolio. If you buy dividend-paying stocks, you’ll have to keep up with the market and analyze your company’s industry. Investors have to learn how to distinguish suitable investments from bad choices.

Titan can simplify the process and save plenty of time. Titan is an active investment app where a team of professionals can manage your portfolio for you. These professionals can help you get into low-risk assets, equities, and crypto. You can take a low-risk approach with some of your funds and swing for the fences with any remaining cash. Titan can help you achieve your investment goals. Titan portfolios have a $100 minimum investment and $5/mo management fees. You can visit Titan’s website to learn about their investment solutions and download the app to open an account today.

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