Retirees often downshift to lower-risk investments, but vehicles like savings accounts, bonds and certificates of deposit (CDs) can play a role even for younger investors, or those approaching retirement.
In a May 2025 report, “Vanguard’s Life-Cycle Investing Model: A general portfolio framework for goals-based investing,” the Vanguard Group found that investors of all ages often have multiple goals with different time horizons. This means that loading up a portfolio with high-growth stocks is not always the right approach.
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Vanguard’s research reveals that retirees, along with other generations, can make good use of low-risk holdings in a portfolio. Findings include:
— Low-risk investments offer flexibility. While retirees focus on capital preservation, younger investors are often saving for homes, kids’ college or other goals that require portfolio stability.
— Growth shouldn’t always lead. Vanguard’s goals-based framework shows the advantages of combining assets for growth and stability, rather than relying on growth alone. Retirees can use low-risk investments to provide portfolio ballast.
— Risk depends on your time frame. As any goal gets closer, portfolios should lean into high-quality fixed income, even if retirement is years away.
Here are some low-risk investments that investors can use to save for short-term goals or to add stability to a portfolio:
1. Treasurys.2. High-yield savings accounts.3. Money market funds.4. Treasury inflation-protected securities (TIPS).5. Investment-grade bonds.6. Certificates of deposit (CDs).7. Municipal bonds.
1. Treasurys
These instruments, issued by the U.S. government, offer a place to stash money and get a better interest rate than in savings accounts. An advantage is the ability to lock in a rate for as long as 30 years.
“Depending on the type of bond, you can redeem them or sell them on the open market if you need the money back,” says Danny Howard, a financial advisor at Core Planning in Waco, Texas.
“However, you may be selling at a loss if the interest rates have risen,” he cautions.
2. High-Yield Savings
While some low-risk investments require a specific holding period, these accounts offer more flexibility.
“High-yield savings is one of the first accounts I open for clients,” says Emily Scott, a certified financial planner (CFP) at Financially Unbroken in Huntsville, Alabama.
These accounts have utility not just for retirees, but for much younger investors as well.
“For my Gen Z clients, it’s a gateway to learning about interest, investing and the power of your money working for you,” Scott says.
She recommends high-yield savings accounts for emergency funds or accessible savings. “My favorite characteristic of a high-yield savings account is its ability to earn more on your cash while remaining fully liquid and readily accessible,” Scott adds.
3. Money Market Funds
These instruments offer a balance between safety, yield and accessibility, says Linda Jensen, founder and CEO of Heart Financial Group in Olympia, Washington.
With yields often in the range of 3.5% to 4%, money market funds may be suitable for investors who want their cash working hard but free from long lockups, she adds.
“While not FDIC-insured, solid money market funds focus on short-term, low-risk investments and with easy access, they’re a good option if you think you might need to take back cash fast,” Jensen says.
4. Treasury Inflation-Protected Securities (TIPS)
TIPS are Treasurys whose principal amounts are adjusted to inflation, based on the consumer price index. This makes them different from other Treasurys, whose principal amounts are fixed for an entire term. “This means that the interest payment every six months will also vary,” Howard says. “The idea is to allow your purchasing power to be consistent instead of being worn away by inflation.”
TIPS may appear to offer lower returns than nominal Treasurys because their quoted rate is inflation-adjusted. They can underperform regular Treasurys when inflation comes in lower than expected or during deflationary periods.
[Read: 15 Best Dividend Stocks to Buy Now]
5. Investment-Grade Bonds
Corporate bonds carry inherently higher credit risk than government bonds. That’s true even for investment-grade bonds issued by firms with strong balance sheets and creditworthiness.
It’s important to understand the risk profile of a company if purchasing individual bonds, rather than simply purchasing an investment-grade bond exchange-traded fund (ETF), such as the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD).
These bonds are often best for longer-term investors looking for moderate risk with solid yield potential, says James Hargrave, CFP and founder of Pillar Financial Planning in Raymore, Missouri.
“Diversifying across multiple positions reduces this risk, often done with a mutual fund or ETF,” he adds.
6. Certificates of Deposit (CDs)
These instruments can work well for investors who need money at a certain time and want to know how much interest they’ll receive.
“Here you’re trading a guaranteed rate and FDIC insurance for less liquidity and access, taxable interest, and early-withdrawal penalties,” says Patrick Ritter, a CFP at Core Planning near St. Louis.
“These can be a good option when you can lock in a high rate for longer periods, when the principal will not be needed near-term,” Ritter adds.
7. Municipal Bonds
For investors in higher tax brackets, the after-tax return often matters more than the top-line yield. In those situations, municipal bonds can shine.
Municipal bond interest is typically exempt from federal income tax and state income tax when issued in the investor’s home state. That can benefit high-earning investors with substantial assets in taxable accounts, Ritter says.
However, investors should be aware of some potential downsides. “Credit quality, how bonds are funded and risks like an early call are all trade-offs to know about before investing,” he notes.
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7 High-Return, Low-Risk Investments for Retirement originally appeared on usnews.com
Update 03/13/26: This story was published at an earlier date and has been updated with new information.