Best Low-Risk High Return Investments In 2025

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Best low-risk high return investments for 2025:

Mutual funds: diversified investment vehicles managed by professionals.
Dividend-paying stocks: companies that provide regular income through dividends.
Copy trading: replicate the strategies of successful traders.
Fixed annuities: insurance products offering guaranteed returns over time.

The pursuit of low-risk high return investments is a common goal among investors. While it is well understood that higher returns typically come with higher risks, there are certain investment options that strike a balance between the two. These options are particularly favored by those looking to protect their capital while still seeking to grow it. In this article, we will explore some of the most viable low-risk high return investments.

Best low-risk high return investments for 2025

Mutual funds

When looking for low-risk, high-return investments, mutual funds are often one of the first options to come to mind. While the concept of a low-risk, high-return investment may seem contradictory, mutual funds offer a diversified way to potentially achieve decent returns while mitigating risk through a portfolio of assets. Let’s dive into how mutual funds can strike a balance between risk and return, offering a more measured approach to investing.

Mutual funds pool investors' money to purchase a diversified portfolio of stocks, bonds, or other securities. This diversification is key to managing risk, as the performance of individual assets may vary — while some investments may lose value, others can rise in value, helping to balance the portfolio. For beginners, mutual funds present an easier way to invest in a variety of assets without the need for constant monitoring or knowledge of each market.

Mutual funds come in various categories, each with its risk and return potential. The primary types include:

Equity funds: primarily invested in stocks, these are riskier but offer higher potential returns.
Bond funds: these are generally safer, with lower risk compared to stocks, offering stable, consistent returns.
Money market funds: the least risky option, typically offering lower returns but preserving capital.
Balanced funds: a mix of both stocks and bonds, offering moderate risk and moderate return, ideal for investors seeking a balance between growth and income.

Diversification: mutual funds offer instant diversification, reducing the risk associated with individual stock or bond investments. This diversification can help spread risk across various asset classes and industries, effectively mitigating unsystematic risk from your portfolio.
Professional management: mutual funds are managed by experienced professionals who conduct in-depth research and analysis. Their expertise helps in making well-informed investment decisions, potentially leading to better returns.
Liquidity: mutual funds provide investors with the flexibility to buy or sell shares on any business day, making them a highly liquid investment. This accessibility allows investors to react to changing market conditions swiftly.

Management fees: mutual funds may charge management fees and other expenses, which can erode returns over time. It's essential to be aware of these costs and choose funds with reasonable fees. A key aspect to consider when choosing the right mutual fund to invest in is the expense ratio.
Lack of control: when you invest in a mutual fund, you have no direct control over the specific securities held in the portfolio. The fund manager makes these decisions, which may not align with your individual preferences.
Tax implications: mutual funds can distribute capital gains to investors, which are treated as income for investors. These distributions can create tax implications for investors, even if they didn't sell their shares.

Dividend-paying stocks

Dividend-paying stocks continue to be a solid investment option for those seeking low-risk, high-return opportunities. Companies such as BW LPG and Diversified Energy Company offer forward dividend yields as high as 21.07% and 18.20%, respectively. These stocks distribute a portion of their profits to shareholders regularly, providing a steady income stream even during market volatility. Dividend-paying stocks tend to be from stable sectors like energy, transportation, and financial services, known for their long-term profitability and sustainability, making them attractive for risk-averse investors.

In 2025, dividend yields have become even more critical for investors, particularly in the context of rising inflation and uncertain market conditions. For example, AGNC Investment Corp. and Armour Residential REIT are two of the highest-yielding monthly dividend stocks, with yields of 14.29% and 14.22% respectively. Investors favor these stocks because they offer frequent payouts, providing consistent income even in unstable markets. This positions them as an excellent low-risk strategy for those looking to balance growth with reliable income.

However, not all high-yield dividend stocks are sustainable long-term. While many companies like Ecopetrol S.A. and TORM plc provide consistent returns, it’s essential to review their payout ratios. Sustainable dividend stocks usually have payout ratios below 100%, ensuring that the company isn’t overextending its profits to meet dividend obligations. The combination of strong fundamentals and regular income payments makes dividend stocks a practical choice for those seeking low-risk, high-return investments.

Reliable income stream: High dividend-paying stocks provide investors with a reliable income stream. This can be especially attractive for retirees or income-focused investors who depend on dividends for regular cash flow.
Capital appreciation potential: In addition to dividend income, these stocks have the potential for capital appreciation. When stock prices increase, investors can benefit from both dividend income and capital gains.
Financial stability: High dividend-paying stocks are often those of well-established, financially stable companies. This can help mitigate some of the risks associated with investing in smaller or more volatile companies.

Interest rate sensitivity: Such stocks can be sensitive to changes in interest rates. When interest rates rise, fixed-income investments may become more attractive.
Income instability: In economic downturns or during company-specific challenges, firms may reduce or eliminate dividend payments. Investors may face income instability if the companies they've invested in cut their dividends.
Market risk: These stocks are still subject to overall market risk. During market downturns, these stocks can experience price declines, affecting the total return on investment.

Copy trading

Copy trading is an innovative investment approach that allows traders to replicate the strategies of experienced and successful investors. This method has gained popularity, particularly among novice traders and those who prefer a more hands-off approach to investing. By copying the trades of seasoned professionals, investors can potentially achieve similar returns without needing to engage in the complexities of active trading themselves.

Access to expertise: With access to the expertise of experienced traders, even those with limited knowledge of financial markets can benefit from the wisdom and strategies of seasoned professionals.
Diversification: Investors can create diversified portfolios by following multiple traders, reducing their exposure to any single trading strategy or asset class. Diversification is a fundamental risk mitigation strategy.
Simplicity: Copy trading eliminates the need for extensive research and monitoring, making it an excellent choice for individuals with busy schedules.

Market risk: While copy trading aims to minimize risk, it does not eliminate it entirely. Markets are inherently volatile, and losses are possible even when following experienced traders. The past performance of traders is not a guarantee of future success.
Fees: Many copy trading platforms charge fees for their services, which can affect an investor's overall returns. It's important to consider these costs when evaluating the potential profitability of copy trading.
Dependence on others: Copy trading relies on the actions of other traders. Investors must be cautious not to become overly reliant on the decisions of signal providers and should maintain an understanding of their own investments.

Fixed annuities

Fixed annuities are a popular choice for conservative investors seeking low-risk, high-return opportunities. These insurance products guarantee a fixed interest rate for a specified period, often ranging from one to ten years, and provide stability by protecting the principal investment. Currently, the top fixed annuity rates for 2025 reach as high as 6.50% for a seven-year term, offering a secure, tax-deferred way to grow wealth. This predictable growth makes fixed annuities particularly attractive for those nearing or in retirement, as they offer guaranteed returns without exposure to market fluctuations.

A key feature of fixed annuities is their tax-deferred growth, allowing investors to benefit from compound interest without paying taxes until withdrawal. For example, an investor with a $100,000 fixed annuity earning a 6% annual interest rate over 10 years could see their account grow to over $134,935, thanks to compounding. Additionally, the guaranteed nature of these products ensures that the principal remains protected, providing peace of mind even in volatile market conditions.

Financial stability: Fixed annuities offer a high degree of financial stability and predictability. The guaranteed interest rate ensures a consistent return on investment and a reliable source of income.
Tax deferral: Tax deferral can be a significant advantage of fixed annuities. Earnings grow tax-free until they are withdrawn, potentially leading to greater wealth accumulation.
Principal protection: Fixed annuities are recognized for their risk mitigation characteristics. They provide investors with peace of mind, knowing that their principal is protected, making them a low-risk investment choice.

Limited flexibility: Fixed annuities are relatively inflexible in terms of investment choices. Investors have negligible control over what happens to their money after the investment.
Liquidity concerns: They often come with limited liquidity. Withdrawals may be subject to surrender charges, and early withdrawals may result in penalties, making them less suitable for individuals needing immediate access to their funds.
Inflation risk: Fixed annuities do not generally offer protection against inflation. Over time, the purchasing power of the income may erode as the cost of living increases, potentially impacting the annuitant's standard of living.

We also studied the conditions of the best brokers, where you can invest with a low risk and get a high income. We suggest you familiarize yourself with the comparison table.

Best brokers
	Min. deposit, $	Investor protection	Open an account
Plus500	100	€20,000 £85,000 SGD 75,000	Open an account Your capital is at risk.
Pepperstone		£85,000 €20,000 €100,000 (DE)	Open an account Your capital is at risk.
OANDA		£85,000 SGD 75,000 $500,000	Open an account Your capital is at risk.
FOREX.com	100	£85,000	Study review
Interactive Brokers		$500,000 £85,000	Open an account Your capital is at risk.

Tips for choosing the best investments

Assess your risk tolerance: Understand how much risk you are comfortable taking.
Diversify your portfolio: Spread investments across different asset classes to reduce risk.
Set clear goals: Define your financial goals and timeline for achieving them.
Stay informed: Keep up with market trends, economic indicators, and investment news.
Review and adjust: Regularly review your portfolio and make adjustments based on performance and changes in your financial situation.

These strategies can help you find a balance between low risk and high returns, suitable for building wealth steadily over time.

Navigating low-risk high return investments

A great strategy often overlooked is zeroing in on companies that consistently pay high dividends but don’t need to plow much of their earnings back into operations. Sectors like utilities or consumer goods are great for this because they offer steady cash flow and tend to stick with their dividend payouts. By reinvesting those dividends back into more shares, you quietly grow your portfolio without having to lift a finger. It’s like putting your money on autopilot, letting it work for you over time.

Another clever move is to blend fixed annuities with dividend stocks. Annuities give you that dependable, no-surprise income, while dividend stocks offer room to grow and bring in some extra cash. Balancing these two lets you play it safe with your core investments while still giving yourself a shot at making some nice returns. This strategy works especially well if you want peace of mind, knowing part of your money is safe, but you’re still giving yourself the chance to get more out of it.

Conclusion

Balancing low risk with high returns is a delicate act in the world of investing. While no investment is entirely risk-free, options such as mutual funds, dividend-paying stocks, copy trading, and fixed annuities offer a viable path for those seeking to grow their wealth with minimal exposure to market volatility. By understanding the nuances of each investment type, traders and investors can make informed decisions that align with their financial goals and risk tolerance.

FAQs

Which investment is with the lowest risk?

In general, the lowest-risk investment is typically U.S. Treasury bonds, as they are backed by the U.S. government.

How can I invest smartly?

To invest smartly, diversify your portfolio to spread risk and consider a long-term perspective to ride out market fluctuations. Additionally, research and seek professional advice when needed.

How do I determine the risk level of an investment?

To determine the risk level of an investment, assess factors like historical performance, volatility, and the issuer's creditworthiness. Additionally, consider your own risk tolerance and investment goals.

How does inflation impact the returns on low-risk investments?

Inflation erodes the purchasing power of low-risk investments as their returns may not keep pace with rising living costs, resulting in diminished real returns. Investors should consider this impact when selecting such investments for wealth preservation.

Team that worked on the article

Andrey Mastykin is an experienced author, editor, and content strategist who has been with Traders Union since 2020. As an editor, he is meticulous about fact-checking and ensuring the accuracy of all information published on the Traders Union platform. Andrey focuses on educating readers about the potential rewards and risks involved in trading financial markets.

He firmly believes that passive investing is a more suitable strategy for most individuals. Andrey's conservative approach and focus on risk management resonate with many readers, making him a trusted source of financial information.

Also, Andrey is a member of the National Union of Journalists of Ukraine (membership card No. 4574, international certificate UKR4492).

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Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data. He is also an educator in the field of finance and technology.

As an author for Traders Union, he contributes his deep analytical insights on various topics, taking into account various aspects.

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).

Economic indicators

Economic indicators — a tool of fundamental analysis that allows to assess the state of an economic entity or the economy as a whole, as well as to make a forecast. These include: GDP, discount rates, inflation data, unemployment statistics, industrial production data, consumer price indices, etc.

Forex market trend

In the Forex market, a “trend” is the label used to describe the general direction that the prices of currency pairs are moving in, over a specific period of time. Trends are basically the pattern that a currency pair appears to be following and can help traders determine when to enter and exit a trade.

Mitigation

The idea behind mitigation is to recognize and effectively trade mitigation blocks. These blocks consist of specific price action patterns that signal a change in market sentiment or demand-supply dynamics.

Diversification

Diversification is an investment strategy that involves spreading investments across different asset classes, industries, and geographic regions to reduce overall risk.

Investor

An investor is an individual, who invests money in an asset with the expectation that its value would appreciate in the future. The asset can be anything, including a bond, debenture, mutual fund, equity, gold, silver, exchange-traded funds (ETFs), and real-estate property.