Best Low Risk Investment For You

The dividends of financial investments are always very attractive. Most times, people invest because they want to reap the same benefit someone else reaped, not because they want to put their money to good use.  This article focuses on educating the layman on how to invest safely, basic risks involved with investing, what the risks entail and how to manage them.

The dividends of financial investments are always very attractive and over time have been the primary motivation for investment amongst peoples of various classes and age. Most times, people invest because they want to reap the same benefit someone else reaped, not because they want to put their money to good use. This investment approach is quite detrimental as it makes the potential investor ignore certain necessary things which ought to be done to guarantee a profitable and satisfactory investment. Although the profit from investment is the primary goal, it is important to note that this goal can be jeopardized easily and as such, cautious steps need to be taken to ensure the right decisions that suit the individual are taken and in the end, these right decisions not only guarantee a maximum profit but fulfillment and satisfaction as these are also key to enjoying investment returns. This article focuses on educating the layman on how to invest safely, basic risks involved with investing, what the risks entail and how to manage them.

What Is An Investment?

Investment in strictly financial terms can be considered as the intentional action of buying financial products such as stocks, bonds, shares or physical products such as real estate, valuable metals like gold, silver, platinum, etc. with the intent of keeping it for a specific period in which its value would accumulate and sell it after the specified period at a higher price thereby accruing income. In other words, an investment is the acquisition of an asset that is kept over time to allow appreciation of value then resold at a higher rate to make a profit. According to Britannica, investment is the process of exchanging income during one period of time for an asset that is expected to produce earnings in future periods. Going by the three definitions, it is evident that investment is a conscious action that is taken with hopes of a better return.

Investing With No Risk – Is It Possible?

The short answer is no. Investments always involve risk, but the level of risk in each type is different. No-risk investments don’t exist. However, the fact that financial investment can easily go sideways is often ignored and believed to be almost non-existent. The risk level of investment is a non-negotiable factor to be considered before taking any active steps towards investment. Therefore, you need to know the best safe ways to invest money.

As earlier established, financial investments are not without risks but a good knowledge of the risks implies better decisions and a higher tolerance level when they occur and this is so because anticipation is the strongest element of strategy. Financial risks are described by Wikipedia as the potential for financial loss and uncertainty about their extent. Investment risks are the possibility that the investment’s return would differ from what is expected and this occurs from depreciation of value in the acquired asset instead of the anticipated appreciation.

What Is A Low-risk Investment?

Low-risk investments are investments with a small percentage chance of loss or a low percentage of under-performance. They are inherently more secure than other investment options. Bonds are of low risk compared to stocks while treasury bills are of low risk investment compared to corporate bonds. They are the most secure investments.

In investment, there are multiple risks but we will group these multiple risks under two; high-level risk investment and low-level risk investment. A high-level risk investment is most likely to incur huge returns and huge losses or extremely poor returns while low-level risk investments are those whose chances of huge returns are very low but protection of initial capital is highly guaranteed. The major difference between these two types of risks is that while the high-risk investment has the potential of making a huge return, the risk ratio is practically the same. For instance, if the probability that the investment plan will pay is 95%, the probability that it will fail is also 95%. Low-risk investment on the other hand promises not many returns but guarantees security especially when it relates to the initial capital. For instance, the possibility of a low-level risk investment to generate a huge return might be as low as 20% but the assurance that at least one can go home with the initial capital or a little less is about 60%.

Best Short Term Low-level Risk Investments

As earlier explained, duration and risk propensity is an imperative determinant for the choice of investment options. Here are three investment options that are not only short-term investments but are also safe short-term investments.

  1. Mutual Funds

Mutual funds just as the name implies are an investment plan where several individuals as required by the company put their money together for the investment company to purchase securities such as bonds and stocks and when these appreciate, the company sells and the profit is shared amongst the investors whilst a certain percentage goes to the company. In a very vivid illustration, the mutual fund is a situation where 6 traders bring $150 each that makes $900, then hire a salesman to oversee the importation of a trailer load of rice which contains about 600 bags. When the trailer load of rice arrives, the hired salesman equally coordinates the distribution and sales of the 600 bags of rice and at the end of the deal reports back to the traders. Assuming he sold each bag of rice for $60, that means he realized a total income of $36000. Based on this, the income would be split according to each trader’s contribution. In this case, their contributions are equal so each of the traders will have an equal share of the income which would be $6000. From this $6000, each trader will have to give a stated percentage to the hired trader and another percentage for costs incurred during the business after which everyone is expected to go home with equal amounts of money. This is a typical example of safe index funds and this is what it is all about.

Safe mutual fund investments are low-risk investments for beginners and often a great option for anyone irrespective of class and status. It is important to note that most times, the conditions and terms applied to mutual funds are often based on the company’s preferences. However, they are guided by Federal financial laws and organizations that are in charge of regulating the activities of these financial institutions. Based on this, the degree of return and investment period is often outlined by the investment company and it differs depending on what the investment company is investing in.

There are risks attached to every investment option and mutual funds are not an exception. In case of a loss in the mutual funds, the investors bear the consequences as their funds are not insured like banks. This is why it is important to know what kind of investments the investment company is undertaking and on your own, you can calculate possible losses and brace yourself for anything. Otherwise, mutual funds are generally safe short-term investments and safe ways to invest small amounts of money. Another issue of concern is always about the transparency and availability of the investment company. Well, mutual funds companies are always registered and operate like normal corporations. This means that they are liable to punishment by the law and hence cannot act in just any manner.

  1. High Yield Savings Account

This is another type of low risk investment on the list of safe investments. It operates more like a normal savings bank account but its interest rate is pegged at a higher rate. So, it is a low risk investment with a high return. For normal savings accounts, the incentives that apply are always minimal and are often insignificant. However, for individuals who consider the bank as the safest option for saving, this option is certainly the best safe high yield investment.  For example, in the UK, the traditional savings account interest rate ranges from 0.01% to 2.10%.

Although the profit margin might still seem way too low to be considered meaningful, this form of investment is a safe short-term investment. This is because every money in the bank is insured and based on this, the risk of a high yield savings account is virtually zero. However, there are still some downsides of opening a high yield savings account. One of them is that they are not free from taxes and other levies. It does not matter if you decide to withdraw the money or just leave it in the account, just like a traditional savings account, the taxes and fees that apply will be deducted when due although it is important to note here that the fees that apply to high yield savings accounts are not as exorbitant as those that apply to the usual savings account. Also, although some high yield savings accounts offer zero charges for monthly transactions, those free charges often have a limit and once they are exceeded, the charges will be deducted. Again, some high yield level accounts place strict limits on withdrawal which rules out the efficiency of these accounts as appropriate emergency funds. Another con of this type of account is that they are mostly run online thereby poor connectivity and inaccessibility can be a problem. Finally, as good as high yield savings accounts sound, they can only be handled by individuals who are highly disciplined and can abide by the strict rules that govern them which often range from minimal amount deposits to strict and limited withdrawal conditions. This makes it a low risk investment for retirement.

With this, we can establish that a high yield savings account would not be appropriate for an emergency account or a low and unsteady income earner who might occasionally need money. This account is most suitable for someone with multiple and steady sources of income as such an individual would be primarily concerned with stashing away income not spending it. It is also important to note that banks vary when it comes to terms and conditions that apply with a high yield savings account and it is best to check and compare these terms and conditions to decide which best suits you. Therefore, the high yield savings account is a secure short-term investment.

  1. Certificate of Deposits

This is also a form of safe short-term investment done within a bank that also involves a savings account. This form of investment involves reaching an agreement with the bank in which you agree to deposit a substantial amount of money and not touch it for a stipulated time after which you are free to withdraw it with interest. In layman's terms, one can consider it as lending money to the bank and giving them time to pay up with interest. Just like the high yield savings account, the interest on this investment is usually significant but varies with banks. For anyone with huge capital and the patience to abide by the rules governing the investment, a certificate of deposit is the right option and the risk involved with this is quite low as insurance is always available to come to the rescue in case of liquidity. Therefore, it is a low-risk high-yield investment.

Best Long Term Low-level Risk Investment Options

As earlier stated, one of the factors determining the choice of the investment plan is the duration of return. The three investment options below are classified as safe long-term investments because their maturity dates are more than 1 year. These investment options are not suitable for emergency funds or quick cash-out schemes.

  1. Bonds

Bonds are also low risk investments which are different from others because they are long-term. It's more like taking up the role of lending money to corporate bodies and the government instead of the banks doing it. Bonds are also part of safe long-term investments. Usually, the investment period of bonds ranges from one to three years or longer depending on the type of bonds and terms and conditions attached to them. Anyone can invest in bonds but this requires a level of expertise and risk tolerance as a lot of things can go wrong. One of the problems with bonds is that the debtors might not always be able to pay back and sometimes when collateral, usually in the form of the company’s assets, is attached then the creditors are secured in case of liquidation. It becomes one of the safe investments with high returns. What is the safest investment with the highest return? It is an investment that is very secure and yields a high return to the investors.

But when collateral is not attached, it becomes a risk and the investors most likely lose their money or get paid extremely late. Also, a red flag for an investor to look out for before investing in bonds is the amount of inflow of cash and revenue for the company or government. This means that if more money goes out compared to money coming in, there is a great possibility that a liquidity problem is around the corner hence it would be risky to invest. It is very important to be guided by an expert if one must invest in bonds as it is a very technical option. Therefore, safe bond investments will be a low-risk investment when collateral, usually in the form of a company’s assets, is attached, and they become secure investments.

  1. Real Estate

Real estate is another low-risk long-term investment option that involves the buying and selling of landed property. Real estate is all about lands and everything that's on them including buildings and small water bodies. When investing in real estate, one should consider many factors such as the ability of the property to appreciate over time, vulnerability of the property to natural and man-made disasters, insurance policies, and government regulations. Real estate is a capital-intensive investment and is least suitable for anyone looking for quick cash as it takes a longer time to appreciate. Overall, before one invests in real estate, it is important to sit and discuss with experts to avoid silly mistakes.

  1. Precious Metals

 Investment in precious metals is also a very good option for anyone with huge capital, risk tolerance, and patience to wait till the stakes are high. Precious metals are safe investments for seniors. Investing in precious metals like gold, silver, platinum, and diamonds involves buying them and keeping them till the rates get high and then selling out. However, expertise is highly required as volatility is very likely to occur here. Also, one has to study the trends as many factors can affect the buying and selling of precious metals. For instance, an economic recession can cause a rush in the market where there will be many sellers and few buyers thereby depreciating the value of the metals. Other than a good knowledge of the market, the other con of investing in precious metals is the risk of theft and purchasing impure metals which can be handled efficiently if experts are involved. Overall precious metals are safe long-term investments as they do not rust or spoil. In good economic conditions, precious metal is one of the safest investments for retirement.

How To Reduce Investment Risks

As earlier stated, there is no investment without risks. Based on this assertion, the best thing to do is to reduce the risk of investment to the barest minimum. Here are some tips to ensure the lowest risk possible.

  • Talk to an expert.

One of the best ways to curtail risk in investments is to talk to an expert. It is not like experts know it all but experts are more knowledgeable in the field and can interpret the numbers better than you can. For this, it is essential to always seek the advice of an expert. However, it is important to know your goals and have the expert guide you on how to achieve them. Sometimes experts can have their motives and can take advantage of that to exploit you so it is important to know what your goals are before meeting the expert.

  • Understand your ability to handle risks.

Another way of reducing risks lies in understanding your risk tolerance as an individual. It is very essential as this would influence your investment options and move you to go for the best available option.

  • Diversification.

“Don’t put all your eggs in one basket”.

Diversification is very important in reducing risks in investment. This is because multiple investments mean multiple channels and streams of income hence when one closes, there is another to lean on and it is almost impossible for all to close at once.

  • Pick Government over individuals and corporate bodies.

Although most corporate bodies have insurance and most individuals have collateral it is always preferable to invest with the government than with other entities or individuals. This is because the government is most unlikely to run into liquidity problems and hence can always pay back no matter how long it takes. Also, streams of income for the government are almost unlimited therefore we can be certain that there will always be money to pay back.

  • Always have a backup plan.

In plain words, it is unwise to invest all your income at once. Always have a backup plan which could be an asset or liquid cash to fall on and reduce the effect of risk should one occur.

Is P2p Lending Risk Free?

Peer-to-peer lending also known as P2P is a model where potential investors are often linked to individuals who need to borrow money but cannot borrow from the bank because of low credit scores or no collateral. To be very plain, there are several risks involved with peer-to-peer lending and the major one is defaulting by the debtors. This is very possible as most peer-to-peer activities are done in virtual space and there is a possibility of absconding by the debtor. It is important also to note that the help of an expert would be much needed here as a lot of things can go wrong. Before venturing into this as an investor, it is important to do a thorough background check to choose the right lender. Here are tips on what to pay attention to reduce the risk involved:

  1. Licensed company: check the license of the company you are choosing to make sure that the company has all the necessary licenses to operate in the industry. The legislation of P2P lending in Europe is still being developed, so the licences may differ from one platform to another, and some have not applied for any yet.
  2. Track record: find bloggers describing their experience with P2P lending, or look for investor communities on social networks. You want to invest on a platform that has had no cases of payment delays or withdrawal impeding.
  3. Buyback guarantee: Another thing to confirm from the company is whether it guarantees a buyback, and the shorter its term, the better for investors. This will make the loan bought back if its repayment is delayed beyond 30 days. For example, at the loan originator will buy back the loan if its repayment is delayed for more than 30 days.
  4. Group Guarantee: Additionally, you can check whether the company ensures a group guarantee. If the company has a group guarantee together with a 30-day buyback guarantee, it will serve as great protection for your investments.


Understanding how to invest safely is very important when investing your money. The best safe ways to invest money are listed and explained above. However, to invest your money in safe high-yield investments, you may need experts like When we talk of Peer to peer lending (P2P), offers a great P2P platform to invest in short-term loans that are well backed by a reliable and highly profitable financial group. With your investment with, you can earn up to 13.3% per annum.

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This calculator gives you just a rough estimate. Your final income depends on various factors and might be greater or less than calculated results.

Robocash d.o.o (“Robocash”) is a company registered in the Republic of Croatia under registration No. 081224371, with legal address at Petračiceva 4, Zagreb, Croatia, 10110.

Robocash is not regulated under any financial services license. When you invest on Robocash, you buy claim rights for loan receivables and investments in loan receivables are subject to risks. We advise diversifying investments and carefully evaluating the risks.