What Are Your Options for Low-Risk Investments?

With an unstable economy looming over investors, many people are turning to low-risk investments to provide a temporary safe haven or long-term investment opportunities. Low-risk investments don't yield as much to the investor, but you're also not at risk of losing large sums of money that you rely upon for retirement. Low-risk investments are a key part of any portfolio; especially over a long term, such as with retirement investments.

Money market mutual funds are a good low-risk investment.
While mutual funds are generally based on the stock market, and just as volatile as the stock market, money market mutual funds are based on money market securities, not the stock market. Because money market mutual funds are based on securities instead of the stock market, they're much more stable, as securities pay out a fixed amount on a fixed term. Money market mutual funds provide great low-risk investments, as you have the security of the money market combined with the liquidity of a mutual fund. Money market securities and instruments typically deal in large denominations, so for many investors, money market mutual funds are the only way to cash in on the low-risk investment options of money market securities.

When considering low-risk investments, think about bonds.
Bonds are another fairly reasonable low-risk investment. While bonds are vulnerable to a company going under, they're still the most secure way in which to invest in a company. Bondholders are considered lenders for the purposes of bankruptcy, and any company going under has to try to pay its lenders before taking care of other financial obligations with remaining funds. Therefore, even if you buy corporate bonds in a company that declares bankruptcy, you stand a decent chance at getting your money back. Government bonds are the ultimate low-risk investments, as the government is the most stable entity in which to invest in America today.

CDs make decent mid-range, low-risk investments.
The rates on Certificates of Deposit aren't exactly spectacular, but they're solid low-risk investments if you've got some money you can afford to tie up for a little while. CDs over $5,000 and for a few years or longer, yield decent rates, up to six or seven percent in some cases. CDs are also federally insured, so they are truly the ultimate low-risk investments. However, if you withdraw from a CD early, you'll face fines and penalties and won't earn the specified amount.

Annuities are another form of low-risk investment.
Annuities are another type of low-risk investment with long-term benefits. When you buy an annuity, you either make monthly payments for a long period of time or purchase an annuity with a lump sum you may have accrued. Once you purchase the annuity, you receive a monthly payment in return. Some annuities only run for fixed terms, while other annuities purchase for retirement run for the rest of your life. Annuities are a fairly low-risk investment, but should be combined with other low-risk investments to round out a portfolio.