8. Money market funds
Similar to how index funds are baskets of multiple stocks, bonds, and other assets, a money market fund is a basket of CDs, bonds, and other low-risk assets within a single fund. They’re typically sold by brokerage firms, although some banks may offer them as well—just keep in mind that they aren’t federally insured. And unlike CDs, money market funds are fully liquid, meaning you can use your funds at any time.
While it’s technically possible to lose money on your investment, it’s rare, since money market funds only consist of the safest securities—namely short-term, cash-like instruments that carry little to no risk. Rather than interest-earning accounts like CDs or HYSAs, which are at the mercy of rising and falling interest rates, returns for money market funds depend on the underlying investments within the fund.
7. Dividend-paying stocks
While dividend stocks don’t have the same guaranteed safety of CDs or Treasury securities, they’re one of the better options if you’re after safe investments with high returns. While they won’t provide the same returns as growth stocks, they’re a favorable investment if you want fixed income in the short term, and can also stay invested for longer periods of time.
Dividend stocks are seen as lower risk because if a stock pays dividends, it typically means the company is mature and well established—not only can they be a dependable source of fixed income in the short term, but there’s also the possibility of the stock value increasing as the company (ideally) continues to grow.
Of course, there’s always the chance that a company will underperform if the market tanks, resulting in dividend payment cuts or removing dividend payments entirely. To mitigate this risk, look for stable companies with a strong track record of consistent growth (not just the one with the highest yield).