As whisperings of a recession loom over the summer season, investors are increasingly searching for high-yield—and low-risk—investments to develop their portfolios. According to experts, the market will likely remain strong throughout the first half of the summer, but many speculate that conditions will change by the end of the year. This guide includes everything you need to know about the five safest investments you can make in June 2023. Consider them all and choose the ones that work best for you and your investment needs.
1. Series I Savings Bonds & Treasury Investments
Government investments are typically considered the safest investment in any market condition. Series I bonds and treasury investments are generally considered the safest of the safe! A Series I savings bond is a government-issued bond, the value of which rises or falls according to inflation. According to the US Treasury, Series I savings bonds protect you from inflation since you earn a rate of interest adjusted to accommodate the effects of inflation.
Getting started: You can purchase Series I bonds directly from the US Treasury website at TreasuryDirect.gov. Consider doing it as soon as possible to maximize your investment, though because these bonds are adjusted for inflation, you can purchase them at low risk anytime. Treasury bills, notes, bonds, and TIPS can be bought and sold directly with money market funds. Remember that although both investments are safe, holding onto them until they mature is best.
2. Corporate Low-Risk Bonds
Corporations, like the government, also issue bonds. A bond is a debt obligation, and the company agrees to pay you interest, so you can almost guarantee that you will earn interest on it (unlike stocks). Although most people think of stocks when they invest with corporations, corporate bonds are considered by experts to be much safer than stocks. Keep in mind that there is some risk associated with a bond. For example, if the company defaults on your investment, you might lose it. Like government bonds, corporate bonds are also subject to interest rate changes—their value decreases as rates climb (which they have done and may continue to do).
Getting started: With corporate bonds, it’s best to seek the help of a professional or educate yourself on the different types of corporate bonds. This is because some corporate bonds are much safer than others. You’ll want to choose exceptionally low-risk bonds if possible. Consider aiming for corporate bond ETFs, which are vetted by professionals and buy the debts of high-quality companies.
3. Fixed Annuities
A fixed annuity is an investment contract reached with an insurance company. The company promises to pay the buyer a specific, pre-established insurance rate on their investment. These are different from variable annuities, which can fluctuate and are thus less safe. A fixed annuity can provide guaranteed income and allow you to defer taxes. You can add an unlimited amount of money to the account.
Getting started: You can purchase fixed annuities directly from insurance companies with a lump sum or multiple payments over time. Remember that fixed annuity contracts are relatively complex, so read the fine print and enlist the help of a professional if necessary.
4. Money Market Funds
Money market funds are mutual funds that invest in liquid investments, including debt-based securities (like those above), cash, cash equivalent assets, and more. Money market funds offer high yield and liquidity at relatively low risk because they diversify risk.
Getting started: You can invest in money market funds through your broker or bank. Look for a value per share above $1 since these are considered the safest funds to invest in. Remember that, unlike securities, you can withdraw from money market funds without incurring penalties.
5. Dividend Stocks
Although stocks are not as safe as the above investments, some are safer than others. Dividend stocks pay cash dividends, limiting volatility and protecting your investment. They offer more maturity and stability and allow your stock to appreciate over time, so they are safer than other stocks.
Getting started: You can invest in dividend stocks through a broker or the stock market. Remember that your investment’s value may fluctuate, but it will almost always increase over time. You can also withdraw funds or get paid a regular dividend from your investment.
Before You Go
The five safest investments you can make in June 2023 are savings bonds & treasury investments, corporate bonds, fixed annuities, money market funds, and dividend stocks. Additionally, consider opening a high-yield savings account as a buffer. Remember that no investments are entirely safe, so expect some bumps in the road. However, the assets on this list are the safest—and vetted by the experts.