Low Risk Investments - Playing it Safe

Although low risk investments have less potential for growth, their returns are more predictable than other types of investments. Everyone's financial portfolio should contain some percentage of low risk investments. What this percentage is will vary depending upon what type of investor you are, as well as your financial needs and risk capacity as it changes over time.

Remember that diversifying your investments is the best way to mitigate risk, and low risk investments are an important part of diversification. They can help you attain short and long term goals, and help smooth out the ride when your other more risky investments have their ups and downs. These investments, however, are only part of a balanced portfolio. On their own, they aren't likely to provide enough to finance your retirement, or other long term goals you might have. In order to reach those goals, you're going to have to take some investment risks. In the next topic, we'll look at some higher risk investments to see what some options are.