The investments below all come with insurance, which make their risks practically nonexistent. But their yields are also very low compared with the long-term returns you might get by investing in the stock market.
Money market accounts
What are they? These are essentially savings accounts, but they allow you to spend directly from the account (unlike a savings account), with a limited number of transactions per month.
Current returns: See our best money market accounts page for up-to-date rates.
What’s safe about them? These accounts are backed by the Federal Deposit Insurance Corporation (FDIC), which guarantees deposits up to $250,000 per institution, per investor.
Where can I get one? Most banks offer money market accounts, but the national average APY per the FDIC is currently just 0.08% (this rate is variable and may change). However, many online banks offer substantially higher rates.
Online high-yield savings accounts
What are they? These are fundamentally similar to typical savings accounts, but by operating strictly online, these banks don’t have to spend money on brick-and-mortar operations. In turn, they pass these savings on to you in the form of higher APYs.
Current returns: See our best high-yield online savings accounts for up-to-date rates.
What’s safe about them? Though they don’t come from a traditional brick-and-mortar bank, these accounts are still FDIC-insured.
Where can I get one? Everything is done online, from choosing a bank, to enrolling, to transferring money into it.
Cash management accounts
What are they? The nature of these accounts varies slightly between providers today, but most of these products behave similarly to an online savings account. These have become more popular among online brokerages and robo-advisors lately, largely because they make it easy for their customers to move money seamlessly to and from an investing account.
Current returns: See our best cash management accounts for current APYs.
What’s safe about them? Cash management accounts are offered by non-bank financial institutions, yet through partnerships with banks, they’re still backed by the FDIC.
Where can I get one? At an online brokerage or robo-advisor.
Certificates of deposit (CDs)
What are they? Banks offer CDs because it gives them a set amount of cash upfront for a set period of time, which they can use to lend to other customers or invest. To incentivize you to start a CD, they often offer higher rates than savings accounts. The downside? If you need to access the cash in your CD, you’ll be hit with an early withdrawal penalty, which often consists of a few months’ interest.
Current returns: See our list of the Best CD rates.
What’s safe about them? With these you put your money into an FDIC-insured account for a specified period, during which you’ll receive a guaranteed interest rate.
Where can I get one? Most banks offer CDs; however, yields tend to be much higher through online banks, for the same reasons noted above.
Treasury notes, bills and bonds
What are they? When you purchase Treasury notes, bills and bonds, you’re essentially giving a loan to the government, and it’s paying you interest on that loan at regular intervals. If you hold it for the full period, you’ll also get back the bond’s face value.
The biggest difference between bills, notes and bonds is how long the government holds your money, and your interest rate.
Bills are paid back in under a year.
Notes are paid back in 2, 3, 5, 7 or 10 years.
Bonds are paid back in 20 or 30 years.
Current returns: See the latest Treasury rates.
What’s safe about them? Treasury securities (bills, notes and bonds) are backed by the “full faith and credit of the U.S. Government.” When purchasing them from the Treasury, you’ll get any regular interest payments promised to you so long as you own the bond, plus the face value of the bond if you hold it until maturity.
Alternatively, you can also sell your bond if you wish, though you’ll lose out on the interest payments you would have had until it matured.
Where can I get one? From TreasuryDirect.gov, or through an online broker.