Invest Safely: 8 Low-Risk Investments with High Returns

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When you’re looking for a low-risk investment with high returns, there are many options to choose from. The key to finding the right one is knowing what your goals are and then understanding how each type of investment fits into those goals. In this article, we’ll cover several types of investments that have been shown to have potential for high returns while still keeping risk low.

  1. Treasury bonds
  2. Money Market Funds
  3. Certificate of Deposit
  4. Government Bond Funds
  5. Dividend-Paying Stocks
  6. Fixed Annuities
  7. TIPS
  8. Municipal Bonds

1. Treasury Bonds

Treasury bonds are short-term investment instruments issued by the CBN, backed by the full faith and credit of the government. The tenor ranges from three months to one year. They’re considered one of the safest investments on the market. As a result, they offer investors relatively low-interest rates compared to riskier but higher-yielding securities like stocks or corporate bonds.

2. Money Market Funds

Money market funds are low-risk investments that pay higher dividends than savings accounts and checking accounts. They’re also safer than investing in stocks or bonds because the value of money market funds doesn’t fluctuate much from day to day, so you don’t have to worry about losing your principal.

  • How do they work? 

Money market funds invest in short-term debt instruments such as certificates of deposit (CDs), treasury bills and commercial paper. This type of investment is considered a cash equivalent because it offers a return similar to what you would expect from a bank savings account or checking account.

  • What’s the risk? 

Money markets can lose value if interest rates rise quickly over time due to inflation or economic growth expectations changing rapidly—but this rarely happens because they’re considered safe havens for investors looking for steady returns without taking on too much risk. Also, unlike bank deposits, money market funds are not insured by the Nigeria Deposit Insurance Corporation (NDIC). This means if something happens, there is no such compensation for investors.

Learn more about how to invest in money market funds.

3. CDs

A Certificate of Deposit (CD) is a low-risk investment that pays a fixed rate and has a maturity date. That means you know what rate of return you’ll earn on your money when you invest in a CD, plus it gives the option to withdraw your investment before the maturity date without paying any penalties or fees. CDs can be broken up into three types:

  • The majority of CDs have fixed interest rates and are generally offered by banks and credit unions.
  • Some CDs have variable rates based on an index, like the S&P 500 or T-bill index. These types of deposits are often referred to as “high yield certificates of deposit” (HICDs). They typically pay higher interest rates than other types because they are riskier for investors.
  • Finally, there are callable CDs which allow an issuer to terminate them early if interest rates fall below those required to make it worthwhile for them to keep them open for longer periods—which means that depositors may not end up earning much at all from their investments during this time period!

Read more about certificates of deposit and how to invest in them.

4. Government Bond Funds

Government bond funds are also low-risk investments with high returns that allow you to invest in the government through bonds. 

Bonds are simply a type of debt—in other words, they’re a loan—which means that when you buy them from an institution like the federal government or another country’s central bank (like the US or China), you’re essentially lending money to that institution for an agreed upon period of time. In return for your money and promise not to withdraw it until later on in life (usually when you retire), they will pay out an amount at regular intervals until maturity occurs and then give back all the original amount plus interest earned over time.

Read more here about bonds and how to invest in them.

5. Dividend-Paying Stocks

Dividend-paying stocks are a great way to diversify your portfolio and earn passive income. They’re also low-risk investments that can deliver high returns over time. Here’s why you should consider adding dividend stocks to your portfolio:

  • Dividends are money paid to shareholders by the company in which they own stock. Companies usually pay out dividends on a regular basis, and they’re typically much more stable than other forms of investment income (such as interest).
  • Dividends are taxed at a lower rate than capital gains if held for more than one year. This makes them an attractive alternative to interest-bearing accounts or bond yields when looking for high yields from low-risk investments!
  • You can reinvest your dividends back into the company itself—and even build up equity—by reinvesting these payments over time.

6. Fixed Annuities

Fixed annuities are a type of insurance contract/investment that provides guaranteed income in the amount you choose, at a specified time. They can be purchased with either a lump sum payment or monthly contributions over time.

The money deposited into the fixed annuity is invested in mutual funds, stocks and bonds, and other asset classes to generate interest earnings for you.

Learn more about fixed annuities.


TIPS (Treasury Inflation-Protected Securities) are low-risk investments that can provide you with great returns. They’re backed by the US government, which means they’re safe and have a low risk of default or bankruptcy. These securities also have an inflation adjuster that allows your money to keep pace with the rising costs of living, so you’ll be able to maintain your purchasing power no matter how expensive things get!

As long as there’s inflation and people are still using dollars to buy things (and there will always be at least some level of inflation), TIPS will continue to pay out interest on top of their principal value. This means that even if prices go up 10% next year, your money is still worth more than it was before—your investment has grown because it keeps up with inflation!

8. Municipal Bonds

Municipal bonds are debt securities issued by state and local governments. This type of bond is generally considered to be safe because it’s backed by the full faith and credit of the issuer: if the issuer defaults on its obligations, the federal government will step in to pay off investors.

Because municipal bonds are often backed by strong entities with strong reputations, they’re typically exempt from taxation at both state and federal levels (except for short-term municipal notes). That means that for most investors, there isn’t much more than interest income to be gained from these investments — which makes them ideal for people who want to grow their savings without having to worry about fluctuating market values or potential tax burdens.

Municipal bonds can also offer attractive returns relative to other types of investments. They pay higher interest rates than fixed-income securities like treasury bonds or corporate bonds due to lower default risks associated with municipal issuers being backed by governments rather than private companies (which may go bankrupt). 

Final Points to Note:

It is true that the right investment strategy can help you reach financial independence. There are many low-risk investments with high returns, as we’ve discussed but they’re not all right for everyone. Here are some tips to note:

Diversify your portfolio

The best way to manage risk is by diversifying your investments across different assets and markets. For example, you may want to invest in stocks from both Nigeria and international markets (and maybe even some bonds). When you do, you’ll get a better sense of how certain companies operate and what their performance looks like over time.

Be willing to take some risk – but not too much!

This takes us back again to diversification. If everything were equal then there wouldn’t be any reason why one investor should choose one asset class over another. But in reality, this isn’t always true. So, investing in something like gold might come off as seeming safer than stocks since historically, gold has been less volatile. However, as long as investors keep things balanced, then they won’t lose money even if their overall portfolio loses value due to broader economic conditions impacting all investments equally. 

Ready to start investing in a mix of all these instruments? View our collection of mutual funds.


A good investment should be something that you can trust to provide a steady source of income. That’s why it’s important to do your research before making any decisions, especially if it is your first time. You want to make sure that the company behind the stock is reputable and trustworthy—and that it will stay around for at least a few years! The same goes for bonds: look at their history and financial data before deciding which ones will work best for you in terms of interest rates and risk level. And remember: always diversify!

If you are curious about more financial tips, check out comprehensive financial education resources on our blog.  

Got any questions? Share them with us in the comments.


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