July 21, 2021

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Are you looking for ways to have an additional income stream aside from your day job? Why not try investing your money? If you are hesitant because of the risk, there are safe investments with high returns for you to try. 

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.

For investors to get the highest returns possible, investors need to take risks. That is challenging for inexperienced investors.

That is why you should match your risk profile with the product or company you consider for investment. That way, you can build yourself a money-making machine that will earn you continuous income.

To help and guide you in making the right choice, here are the best safe investments with high returns.

16 Best Safe Investments With High Returns

Here are some of the safe investments options with high returns that you can look into that would fit your risk appetite.

1. High Yield Savings Accounts

One of the investment options with the lowest risk is a high yield savings account. The Federal Deposit Insurance Corporation (FDIC) insures your money up to $250,000 as long as the deposit is in an FDIC-insured entity.

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.

While a savings account isn’t necessarily an investment, you can earn a modest interest rate without risking your money.

One of the best savings accounts is with CIT bank. The bank has a competitive interest rate for most of its products. Their Savings Builder account pays interest of 0.40% APY. Remember that the interest rate may change according to the market condition.

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.

A CD requires an investor to commit to investing their money for a certain period ranging from one month to 10 years. If they access the cash before the period is over, they are penalized. You get compensated for the loss of easy access to your money with a better interest rate than your average high yield savings account.

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.

They can be divided as follows:

  • Series EE Bonds. These have a fixed rate of interest for a maximum period of 30 years. Their interest rate is usually set bi-annually, and therefore, you are assured of the amount of interest that the bond can accrue. These are usually long-term investments, and investors are penalized for redeeming them early.

  • Series 1 Bonds. These earn an interest based on a combination of a fixed rate and inflation rate. The fixed interest rate is usually set after buying the bonds, while the inflation rate is generally adjusted after every six months. These bonds have a five-year maturity period, and investors who withdraw before the maturity period is over are penalized.

  • Government Bonds. Government bonds represent debt that a government issues as a way to support its spending. Interest comes in a periodic payment over a set period of 1 to 30 years, with which you can have a steady stream of income.

4. Money Market Accounts

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.

You might be allowed to write checks or use debit cards with the accounts, providing greater flexibility.

However, you are limited to six transactions a month in a money market account. When you exceed this, you will pay the penalty. Money market accounts are a good investment option for investors with money they might use infrequently or those who need a little flexibility with their savings accounts.

5. Municipal Bonds

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.

There are no chances of the US government defaulting, and there are a few cases of major cities filing for bankruptcy. But like you would guess, it’s extremely rare for a major city to file for bankruptcy, and likewise, cases of municipal bond default are rare.

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.

Do not confuse money market funds with money market accounts, as these are two different things. Money market funds are sponsored by an investment fund company, while financial institutions offer money market accounts.

Money market funds provide investors with continuous income while protecting their principal investment.

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.

Annuities may be fixed or variable. With a fixed annuity, you will receive a fixed return on your investments, while in a variable annuity, your investment may fluctuate depending on the market. So the value tends to go up or go down.

Since annuities are an insurance product, guaranteed returns still depend on the insurance company’s health where you bought the annuity. Even presented with that risk, many individuals still accept that annuity can bring stability to their portfolios.

8. Investing In High Dividend Stocks

Many companies make dividend payouts to their shareholders quarterly, semiannually, or yearly. It’s possible to achieve some good returns by investing in companies that pay high dividends. However, you should ensure that you buy stocks in companies that make consistent dividends payments.

It would help if you considered the dividend yield of the company before making a buying decision. Also, find a big company with a long history of financial stability and low volatility.

9. REITs

Real Estate Investment Trusts (REITs) are a good way of spending money in real estate without investing thousands of dollars as a property owner. REITs provide a dividend that is above average and generally offers good returns over time as the value of property increases.

Begin by researching REITs that buy property in an area of interest. When you’ve earned some money, for example, through flipping things for profit, you can use that to start investing in REITs.

The majority of REITs are registered with the SEC and listed on the public exchanges. These are publicly traded REITs. On the other hand, private REITs aren’t registered with the SEC and aren’t listed on a public exchange.

10. Real Estate Crowdfunding

With real estate crowdfunding, you pool together money with other investors to invest in properties. When an investor identifies an investment opportunity, they may not have the ability to execute the project.

There are usually three players in crowdfunding real estate. These are the sponsor who plans and looks at the entire investment, the platform where the sponsor seeks investors, and the investors who contribute capital in exchange for a part of the profit.

Becoming an investor in a real estate crowdfunding project can provide some good returns even though it has a substantial element of risk.

11. Corporate Bonds

Just like governments, corporations also issue bonds to fund their expansion plans. When you buy a corporate bond, you lend money to the issuing company that, in turn, commits to pay interest on the initial capital plus interest on maturity. Corporate bonds have bigger interest rates than government bonds. They offer investors the ability to invest in different sectors with an option to cash out before maturity.

While this is a relatively safe investment, it also has an element of risk. Compared to treasury bonds, corporate bonds are riskier, as corporations experience bankruptcy more often than governments. However, if you stick to the blue-chip public companies, it’s possible to stay safe.

12. Exchange Traded Funds

One of the downsides of the stock market is that it is very volatile, and the possibility of losing your investment is always present. One of the reasons that keep people out of the stock market is that they fear losing their investment.

Fortunately, Exchange Traded Funds offer investors a good diversification option. Exchange-Traded Funds, or ETFs, is a basket of investments that you can buy and sell on an exchange. ETFs are traded similarly in the same way you trade shares of stock. ETFs shares are traded daily in which prices can change depending on the supply and demand and stock market hours.

Unlike mutual funds, ETFs require less minimum investment than mutual funds. So, if you don’t have enough money yet, you can go for ETFs since they provide many different assets and offer a diversified portfolio for investors.

13. Peer-To-Peer Lending

Peer-to-peer lending (P2P) is when you have enough cash and lends it to a borrower against a good interest. Individuals choose to borrow money from P2P instead of a traditional bank since it is a more accessible funding source than a conventional financial institution.

P2P lending generally provides high returns for the investors, and it will also diversify your investment portfolio. However, this kind of investment is not secure, especially if the borrower defaults on their loan. It is important to know the different levels of risk associated with the loan, so you know what to expect and how much risk you can take.

14. Treasury Inflation-Protected Securities (TIPS)

Treasury Inflation-Protected Securities (TIPS) can be a great hedge against inflation. While they pay lower interest than what the normal treasury bills of the same length pays, the principle increases or decreases in value depending on the prevailing inflation rate.

TIPS can be an excellent option for investors with money they may not need before the bond’s maturity. The FDIC insures any deposits up to a total of $250,000.

15. Growth Stock Funds

Growth stock funds invest in a wide range of growth stocks instead of the single growth stock. This ensures that the risk of a single growth stock falling and hurting the whole portfolio is low.

With this investment option, you don’t need to evaluate and choose individual growth stocks. Instead, the fund is managed by expert managers who select particular growth stocks.

Growth stocks are a good choice for diversifying your portfolio. They are highly liquid, and you can put in or remove your money as you wish.

You can find growth stocks easily with a stock advisor service, like Motley Fool. For more information check out Motley Fool Stock Advisor Review.

16. Rental Housing

One of the best long-term investment strategies is the buying and holding of real estate. It’s especially a good choice for buy-and-hold investors who would like to build wealth before retirement. For example, Grant Cardone’s net worth was mostly built through real estate investing.

Inflation benefits the rental housing market as it increases the value of the asset. In many neighborhoods, homes usually appreciate at 1.5 times the rate of inflation. While the capital of investing in a housing property is high upfront, you will not lose your whole investment since it’s a physical asset. This is why real estate is a high return but lower risk investment.

The only downside of a rental property is that it’s among the least liquid investments. If you would like to recoup your cash, you will need to sell. Luckily, keeping the property is one of the best ways of generating passive income.

Conclusion - Best Safe Investments With High Returns


When you’re investing, there is always some risk involved. But to grow your money, you need to take some risks.

Educating yourself manages the risks involved in investing your money. So, do your research when investing in these products, and you will be able to reap the rewards consistently.

The key here is understanding what investments are available to you and which one best matches your risk appetite. Always remember that successful investing is about managing risk and not avoiding it. So tread carefully and enjoy your investment ride.

This post originally appeared on SavoTeur

About the author 

Marjolein

Radical FIRE is a personal finance platform that is all about financial independence. At Radical FIRE, you will learn to save money, make more money, and invest to optimize your way to freedom. We want you to reach your financial goals and have fun while doing it!

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