Market Overview

Top 10 Low Risk Investments that Generate High Returns for your Retirement


Retirement is usually never an option and you know that someday you will have to pack it in and stop working. However, you have to make the right choices if you hope to support yourself and even maybe other family members when you go on the unemployment list. Choosing the right investments are key to getting your financial obligations still met after retirement.

Choosing low risk investments is a sure way of stretching your money. You do not have to invest much money every month and you can watch your funds grow. This is a sure way of beating inflation and staying on top of the game. So which low risk investment opportunities are available for you to choose?

Roth IRA

Roth IRA can be used in more than one ways such as for education and retirement. There are flexible plans to choose from when using the Roth IRA investment scheme such as the pension and social security plans. The individual retirement accounts (IRAs) allow employees to pay amounts into the fund for your golden years. The Roth IRA fund pays interest on each investment and since you already paid your taxes before making payments, you are not required to pay anymore when you are collecting.

Certificate of Deposit

Certificate of Deposit is a great low cost investment that you can use to start putting aside funds for retirement. You can sign up at your local bank, credit union and other financial institutions to get a Certificate of Deposit account going for you. It works by allowing you to deposit money with the financial institution of your choice for a specified length of time. If your deposit is less than $250,000 the Federal Deposit Insurance Corporation (FDIC) will cover your principal, thus, making you get a refund in case there is a loss on the part of the financial institution that you invest with.  

Once you decide on how long you want your money to remain with the institution, you will get a reward of a certain amount of interest on what you deposit in the account. The good part is that your rate of interest will not go down regardless of how many times the market changes, even if there is a downward trend happening in the economy. If you decide to withdraw funds from the account, you will have to pay money for a three months penalty.  

US Saving Bonds

The US Saving Bonds are bonds that have the backing of the US Federal Government; hence, they are safe for investment purposes. They are usually stable and possess small risk of loss to you.

There are two types of US saving Bonds that you can invest in and watch grow. These two bonds are Series I and Series EE.

Series I bonds consist of a rate that is of a fixed amount and one that is inflation adjustable. While the fixed rate remains the same throughout, the inflation adjustable one has the flexibility to increase or decrease every six months. Since the inflation adjustable Series I bond is subject to fluctuations in the market, you stand a chance of either losing or gaining interest on your investment.

You get a fixed interest rate when you invest in the Series EE Bonds because of the automatic returns that these investments carry. Though the interest rates offered by issuers of these types of bonds are low, there is great anticipation by investors that there will be a sharp increase in the future. These types of bonds are suitable for retirement purposes because of four reasons:

1.       There are no local taxes charged on interest arising from them

2.       You have the option to double your tax deferred contributions on a yearly basis

3.       You pay no penalties if you should make withdrawals from your investment

4.       This type of investment is safe because of the backing of the US government

Treasury Inflation Protected Securities (TIPS)

One low risk investment for you to save through and help in retirement is the Treasury Inflation Protected Securities (TIPS). You can register and purchase these securities individually or through a mutual fund.

TIPS have two types of investments opportunities tied to it that guarantee growth. These two types of investments are a fixed interest rate and an inflation adjustable section backed by the government and which guarantees growth on your investment regardless of how high inflation increases. Putting away a little in your Treasury Inflation Protected Securities will help you to cope when retirement is in sight.  

Municipal Bonds

Government often depends on issuing Municipal Bonds to the public to meet their financial needs. One reason why the public choose to buy these bonds is that they have no Federal Income Tax obligations attached to them. They are very affordable and the likelihood of them failing is slim. Enjoying your retirement by living off the proceeds from Municipal Bonds is a sure way to retire in style. 

Money Market Funds           

A sure way of planning for your retirement is to invest in Money Market Funds because they are safe and your investment will not decrease. In addition, when necessary you are paid a little cash occasionally from the fund to help meet your present living expenses. Usually, Money Market Funds strive to gain a value of $1.00 per share in their Net Asset Value (NAV).


In the past, Annuities have proved to be unreliable. However, today they are in great demand because of the need to find a long-term investment. Annuities are usually a way for an insurance company to establish a trading pattern with you. By collecting money from you regularly, an insurance company is rewarding you by guaranteeing a stated rate of interest on your investment. Insurance companies can give you a fixed return or a variable one; however, in most cases you can only get returns based on the performance of the stock market or the economy.

Preferred Stock

A popular type of investment that you might want to consider when planning for retirement is preferred stock. On the market, preferred stocks are less risky than those of common stocks are and owning them guarantees you dividend payments when the issuing company makes a profit. In reality, these stocks carry both equity (stock) section and debt (bond) section.

Dividend Paying Stocks

Buying the right stocks can make a difference to your retirement. When buying stocks you should purchase ones that pay high dividends. Try to avoid buying stocks that do not pay regular dividends so that your money is not tied up in nonperforming ones. One of the best ways to ensure you will get good dividend payouts is by taking note of the performance of the issuing company. You can find information about the company by going online or checking out the company’s prospectus. To choose the right stocks to buy, you can also visit Scottrade or E*TRADE and for a fee let them help you make the right decision. You can also seek the advice of a stockbroker as well.

Life insurance policy

Owning a life insurance policy is a way of ensuring that you have money during your retirement years. Apart from your beneficiaries getting a death benefit payout if you die, you can live off the cash value while you are yet still alive. In addition, if you live to retirement age, a whole life insurance plan states that either you can collect the face value of the policy or you can choose to collect payouts each month. Furthermore, if you should fall into financial difficulties before you reach retirement, you can borrow from the cash value portion in the policy. 

Having an array of means to meet your retirement needs is a great way to achieve peace of mind. Once you have money rolling in to meet your everyday needs during your retirement years, you can sit back and enjoy life to the maximum. If you have any doubts about choosing the right investment to cover expenses during retirement, you can seek out a qualified financial adviser and ask him or her to assist you.                

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


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