What are some very low-risk investments?
Virtually risk-free investments include U.S. Treasury bonds, bills and notes, which are backed by the full faith and credit of the U.S. government, and deposits at banks where accounts are insured for up to $100,000 by the Federal Deposit Insurance Corp(FDIC). But these investments protect only against the risk you won’t get your money back. There’s also inflation risk to consider. For example, if you buy a five-year, 5% certificate of deposit covered by FDIC insurance, and inflation soars to 10% , your principal will be losing 5% of its purchasing power each year. Also, Treasury bonds are risk-free only from a default basis. Treasury bond prices still move inversely to changes in interest rates. So there’s really no such thing as a risk-free investment.
