What is the best place to invest money without risk?

What is the best place to invest money without risk?

All investments have inherent risk, but it is too risky to not invest because you’ll lose money to inflation. However, low-cost index funds such as the S&P 500 have historically shown positive returns over the long run. Other low-risk Investments include covered call exchange-traded funds, dividend stocks, Real Estate Investment Trust, Certificate of Deposits, money markets, and bonds.

Imagine, investing your money worry-free. Your money continues to grow every single year and you become comfortable investing in the stock market.

Investing isn’t that scary when you understand how investing works. 

Luckily for you, I’m going to help you understand the risks of investing. I’ll show you the concept of risk versus return and some of the best places to keep your money. You will be able to invest comfortably with a well-diversified portfolio.

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Investment risk vs. Investment return

In general, the greater risk the investment is, the greater the potential return. It is almost impossible to get a low-risk, high-return investment. However, you need to invest your money otherwise you might end up losing money to inflation. 

For example, you could have invested $10k in the Shopify initial public offering and it would have grown to $330,000 in the first five years. 

However, picking an individual stock, especially an IPO, is extremely risky. Initial public offerings are a key turning point for most companies where they either sink or swim. You could have made a lot of money on Shopify or you could have lost your investment.

In the case of Shopify, investors were handsomely rewarded.

On the conservative end of the investment spectrum, you could put your money under your mattress. Inflation causes everything to become more expensive. Therefore, in 30 years your money has not grown (or been lost), but the cost of living has gone up.

You can’t afford to not invest your money. not investing your money is more risky than investing your money in the first place.

You have to find the balance of risk versus reward that is right for you. I’m going to show you different investment vehicles to help you better understand risk-versus-reward.

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What is the best place to invest money without risk?

One of the best places to keep your money is a low-cost Index Fund like the S&P 500. Low-cost index funds are often well diversified and have a history of increasing in value over time. Investing in low-cost index funds can help you beat inflation while getting a respectable return on investment.

However, there are other places to keep your money. You can invest in exchange-traded funds, covered call ETFs, dividend stocks, real estate investment trusts, CDs, money markets, and bonds.

Let’s take a look at each of the different investment opportunities and see which ones are more risky than others.

Exchange Traded Funds

Exchange-traded funds (ETFs) are one of the best places to keep your money. An exchange traded fund is a collection of stocks offered at one low price. Therefore, you get access to hundreds of stocks and an instant diversified portfolio.

There are plenty of different types of exchange-traded funds. For example, an ETF might track real estate, the S&P 500, technology, large cap, small-cap, or any other investment asset class.

Beginners should probably start with a low-cost S&P 500 ETF, like VOO. The S&P 500 tracks the United States top 500 companies, so you know you’re investing in quality. You can always further diversify as you get more comfortable with investing.

Exchange-traded funds are often seen as lower risk investment because they contain hundreds of different stocks. 

For example, VOO has over 500 different stocks so if one company fails then you don’t lose your entire investment. In reality, you probably wouldn’t notice any change in your investment if 1 of 500 companies went under.

Covered Call ETFs

Covered call exchange-traded funds are perfect for those looking for a consistent return on investment. A covered call exchange-traded fund is seen as an income generating asset. Therefore, your turns are primarily income and have low volatility on the share price.

For example, you might find a covered call exchange traded fund where the price floats between $22 and $24. The share price doesn’t increase or decrease very much. 

However, covered call exchange-traded funds often produce a high dividend yield. Most covered call ETF have a dividend yield between 6-12%. Therefore, you should expect between $6,000 and $12,000 annually for every $100,000 invested.

As you can see, covered calls are fairly low-risk because the price doesn’t change significantly. You can invest in the covered call ETF, receive income, and sell later to recover your principal investment.

Dividend stocks

Choosing individual dividend stocks can be a riskier investment. You are not well diversified anytime you are choosing individual companies. However, choosing individual dividend stocks can give you the opportunity to build a high-income portfolio.

You could invest in dividend stock exchange traded funds like VYM. Dividend stock exchange traded funds contain hundreds of individual dividend paying companies. Therefore, you reduce your risk by purchasing an ETF.

However, some individual investors like to pick their own dividend stocks. For example, an individual investor might take 15 different companies that pay dividends to invest in.

The problem is that you are now heavily dependent on the performance of those 15 companies. Should one of the companies decide to suspend their dividend, a portion of your income stream stops.

So why would anybody want to pay for individual companies?

You are able to build a portfolio with a high dividend yield when you invest in individual companies. Exchange traded funds typically pay between 3 to 4% in dividend yield. However, individual stock investors can build portfolios ranging from 6% to 10% yield.

Real Estate Investment Trusts

Real Estate Investment Trusts, otherwise known as REITs, are very similar to dividend stocks. The primary difference between REITs and dividend stocks is that REITs invest in real estate. Therefore, REITs can be impacted by economic downturns which affect real estate.

As an example, during the Coronavirus REITs had a more difficult time collecting rent from tenants. As a result, the dividend payment was significantly less or even suspended for many REITs.

Personally, I think REITs are a good investment.You are investing in a tangible asset and you don’t have to manage the property yourself. REITs pay an income stream which can help supplement your income in retirement.

You can also purchase a REIT exchange traded fund, like VNQ. As previously discussed, the exchange traded fund is a collection of stocks (in this case REITs) to help diversify your portfolio.

I don’t think REITs should be your sole focus when it comes to investing. However, I do believe that REITs play an important part in your Investment Portfolio.


Certificate of Deposits are another investment asset that is considered a safe investment. However, Certificate of Deposits don’t pay a lot of interest. In other words, investing in a Certificate of Deposit is just one step above putting your money under your mattress.

Typically, investing in a certificate of deposit is not worth it. However, there are some investors that believe having Certificate of Deposits increases their diversification.

Money Markets

Money markets are not a good tool for building wealth. Typically, money markets are an accessible place to put your money and gain more interest than your typical savings account. 

Money markets are an ideal place to stash your emergency fund. You will always have access to your money market account and there is little risk to the funds. 

Given the option between placing money in a money market or CD, I would currently use a money market. 


There are many different types of bonds, but bonds in general are considered a safe investment. However, most bonds can barely keep pace with inflation. Bonds are typically used by retirees who are looking to protect their portfolio from stock market volatility.

Can I get a guaranteed 4 percent return on investment?

It is possible to get a guaranteed 4% return on investment. You can invest in dividend pain assets like REITs, dividend stocks, and covered call ETFs. Alternatively, you can invest in the S&P 500 for the long-term which has a 10% annualized return.

When you invest in S&P 500, you will have up and down years. However, the S&P 500 has consistently increased in value over the years. Therefore, you will have to understand that there is some volatility when investing in stocks.

Where should I invest money to get a good return?

Place your money in low-cost index funds if you are wanting to get a good return on investment. Ideally, you are investing in simple index funds like the S&P 500. Investors who invest for the long-term have historically seen positive returns on investment.

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Summary: Best low-risk investments 

As you can see, there are plenty of places to place your money without risk. However, the best place to invest is just picking low cost index funds.You need to find an investment strategy that balances your risk and reward tolerance.

 You can invest in exchange-traded funds, dividend stocks, REITs, and covered call ETFs. Other assets include Certificate of Deposits, money markets, and bonds. However, CDs, money markets, and bonds are low paying investments which barely keep up with inflation.

It is possible to get a 4% return on investment. However, you will need to have a slightly higher risk tolerance if you want a guaranteed 4% every year. The best way to get a guaranteed 4% return on investment is through income producing assets.


John is the founder of TightFist Finance and an expert in the field of personal finance. John has studied personal finance for over 10 years and has used his knowledge to pay down debt, grow his investment portfolio, and launch a financial based business. He is committed to sharing content related to personal finance based on his experience in his career, investing, and path towards reaching financial independence.