The markets are highly volatile right now, and banks are offering low interest rates on savings accounts. If you're looking for a slightly better return without much additional risk, government bonds are your best option. Treasury bonds are currently yielding 0.85% for a month, up 2.97% over a 30-year period (starting June 2020). Preferred stocks have offered average annual returns of more than 7%, most of which come from dividend payments.
However, the level of risk that a given security carries will vary according to its type. Money market mutual funds and money market accounts offer higher returns than savings accounts, but they also come with more liquidity and may even allow you to write checks or use a debit card with the account. Certificates of Deposit (CDs) are almost identical to savings accounts, but you usually have to pay a penalty if you access your cash before the CD term ends. Treasury inflation-protected securities (TIPS) provide stability in response to inflation.
The S&P 500 has returned approximately 10% per year, and stable value funds are one of the best low-risk investments available.We're all exposed to some kind of risk every day, and the personality, lifestyle and age of an investor are some of the main factors to consider for the management of individual investments and risk purposes. As investment risks increase, investors expect higher returns to offset the assumption of those risks. A fundamental idea in finance is the relationship between risk and return.
