Safe Investments: Finding The Safest Investments in 2023

In today’s uncertain economic climate, many investors are looking for ways to build wealth safely. While there is no such thing as a completely risk-free investment, there are several options that are considered relatively safe investments, making them perfect for a robust DIY family office.

In this post, we will explore some of the safest investment options available in 2023. We will examine traditional safe investments such as savings accounts and Treasury bonds, as well as newer options such as sustainable investments, cryptocurrencies, and collectibles.

Whether you are a seasoned investor or just getting started, this guide will help you make informed decisions about where to put your money in order to build wealth safely in 2023.

The Safest Investments Possible

There are several investment options that Americans can consider to build wealth safely. Here are five of the safest options:

  1. Savings accounts: Savings accounts are one of the safest investment options available, as they are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per insured bank. While they typically offer lower interest rates than other investment options, savings accounts provide a stable and low-risk way to save money.
  2. Certificates of deposit (CDs): CDs are similar to savings accounts, but they offer higher interest rates in exchange for a fixed-term commitment. They are also insured by the FDIC, making them a safe investment option.
  3. Treasury bonds: Treasury bonds are issued by the U.S. government and are considered to be one of the safest investments available. They offer a fixed rate of return and are backed by the full faith and credit of the U.S. government.
  4. Index funds: Index funds are a type of mutual fund that tracks the performance of a particular stock market index, such as the S&P 500. They offer a diversified investment portfolio, which helps reduce risk, and they typically have lower fees than actively managed funds.
  5. Real estate investment trusts (REITs): REITs are a type of investment that allows investors to own a portion of a real estate portfolio, such as commercial or residential properties. They offer a steady stream of income through dividends and are generally considered a safe long-term investment option.

It’s important to note that no investment is completely risk-free. While these options are generally considered safe, investors should still do their own research and consult with a financial advisor to determine the best investment strategy for their individual circumstances.

Savings Accounts

Savings accounts are one of the safest and most popular investment options for a number of reasons, making them an attractive choice for those looking to build wealth safely in 2023. First and foremost, savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor, per insured bank. This means that even if the bank were to fail, the account holder’s funds would be protected up to the insured limit.

Additionally, savings accounts offer a stable and predictable way to save money, as they provide a fixed interest rate that is usually higher than the rate of inflation. Although savings accounts typically offer lower interest rates than other investment options, such as stocks or bonds, they provide a low-risk option for those who are risk-averse or who need quick access to their funds.

Savings Accounts are Incredibly Liquid

Another advantage of savings accounts is that they are easily accessible and highly liquid, meaning that funds can be withdrawn at any time without penalty. This makes them an ideal choice for emergency funds or short-term savings goals, such as saving for a down payment on a house or a new car.

Overall, savings accounts provide a safe and dependable way to store and grow your money in 2023. While they may not offer the highest returns, they offer peace of mind and a low-risk way to build wealth over time. It’s important to shop around and compare different savings account options to find the best interest rates and account features that meet your individual needs.

Certificates of Deposit (CDs)

Certificates of deposit (CDs) are a type of savings account that is considered a safe investment option for many individuals in 2023. CDs offer a higher interest rate than traditional savings accounts, making them a popular choice for those looking to earn a higher rate of return on their savings.

CDs are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor, per insured bank, making them a safe investment option. This insurance protects your deposit from loss if the bank were to fail. Additionally, CDs are issued by federally-insured banks and credit unions, which are considered to be some of the most stable and secure financial institutions.

One of the unique features of CDs is that they offer a fixed rate of return over a specific term, which can range from a few months to several years. This means that the interest rate on a CD is locked in at the time of purchase and remains the same throughout the term of the investment. This fixed interest rate can help protect your investment against inflation and market fluctuations, making CDs an attractive choice for those looking for a low-risk investment option in 2023.

General Liquidity with CDs

Another advantage of CDs is that they are highly liquid and easily accessible. While there may be penalties for early withdrawal, CDs can typically be redeemed before their maturity date if needed. This makes them an ideal choice for those who want to earn a higher rate of return than a savings account, but still may need access to their funds in the short term.

Overall, CDs offer a safe and stable investment option for those looking to build wealth in 2023. As with any investment, it’s important to shop around and compare different CD options to find the best interest rates and term lengths that meet your individual needs.

Treasury Bonds

Treasury bonds, also known as T-bonds, are issued by the United States government and are considered one of the safest investment options available in 2023. Here are some reasons why T-bonds are a safe investment:

First and foremost, T-bonds are backed by the full faith and credit of the United States government. This means that the government is obligated to pay the interest and principal on the bond, making it an extremely safe investment option. The U.S. government has never defaulted on its debt, and its ability to raise revenue through taxation gives investors a high level of confidence in the safety of T-bonds.

T-bonds are also highly liquid, meaning that they can be bought and sold easily in the secondary market. This makes them an attractive investment option for those who want a safe and stable investment that they can sell quickly if needed.

Further Reasons to Consider Treasury Bonds

In addition, T-bonds offer a fixed rate of return over a specific term, which can range from a few months to 30 years. This means that the interest rate on a T-bond is locked in at the time of purchase and remains the same throughout the term of the investment.

This fixed interest rate can help protect your investment against inflation and market fluctuations, making T-bonds an attractive choice for those looking for a low-risk investment option in 2023.

Finally, T-bonds are considered to be one of the most risk-free investment options available, making them an ideal choice for those who are risk-averse or looking to diversify their investment portfolio.

Overall, T-bonds are a safe and stable investment option for those looking to build wealth in 2023. As with any investment, it’s important to do your own research and consult with a financial advisor to determine the best investment strategy for your individual circumstances.

Index Funds

Index funds are a type of mutual fund that tracks the performance of a particular stock market index, such as the S&P 500. They are considered a safe investment option in 2023 for several reasons.

One of the primary advantages of index funds is that they offer a diversified investment portfolio. Rather than investing in individual stocks, which can be risky and require a great deal of research and analysis, index funds provide exposure to a broad range of stocks in a particular market index. This diversification helps to reduce risk and volatility, making index funds a relatively safe investment option.

In addition, index funds typically have lower fees than actively managed funds. This is because they are passively managed, meaning that they don’t require the same level of research and analysis as actively managed funds. This can lead to lower costs for investors, which can help to boost returns over the long term.

Transparency and Liquidity with Index Funds

Another advantage of index funds is that they are highly transparent. Because they are designed to track a particular market index, investors can easily see the stocks that the fund is invested in and how those stocks are performing. This transparency can help investors make informed decisions about their investments and can also help to build trust in the investment process.

Finally, index funds are highly liquid, meaning that they can be bought and sold easily in the secondary market. This makes them an attractive investment option for those who want a safe and stable investment that they can sell quickly if needed.

Overall, index funds are a safe investment option for those looking to build wealth in 2023. As with any investment, it’s important to do your own research and consult with a financial advisor to determine the best investment strategy for your individual circumstances.

Five Tips for Selecting Index Funds

  1. Look for index funds with low expense ratios: The expense ratio is the fee that the fund charges to manage your investment. Lower expense ratios mean more of your money is going towards your investment and can help to maximize your returns.
  2. Consider broad-based index funds: Broad-based index funds, such as those that track the S&P 500, offer exposure to a wide range of stocks and can help to reduce risk and volatility.
  3. Look for index funds with a long track record: Index funds with a long history of solid performance can provide more stability and consistency in your investment returns.
  4. Consider tax-efficient index funds: Tax-efficient index funds, such as exchange-traded funds (ETFs), can help to minimize the impact of taxes on your investment returns.
  5. Consider your investment goals and risk tolerance: Choose index funds that align with your investment goals and risk tolerance. For example, if you have a long-term investment horizon, you may be comfortable investing in funds that track more volatile markets, such as emerging markets or small-cap stocks.

Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) are a type of investment that allows investors to own a portion of a real estate portfolio, such as commercial or residential properties. They are considered a relatively safe investment option in 2023 for several reasons.

One of the primary advantages of REITs is that they provide a steady stream of income through dividends. REITs are required by law to distribute at least 90% of their taxable income to shareholders in the form of dividends, making them an attractive option for income-oriented investors. This income can provide a relatively stable source of cash flow and can help to protect against inflation.

In addition, REITs offer exposure to the real estate market, which can provide diversification and help reduce risk in a portfolio. Real estate investments often move independently of the stock market and can provide a hedge against market volatility.

Another advantage of REITs is that they are highly liquid, meaning that they can be bought and sold easily in the secondary market. This makes them an attractive investment option for those who want a safe and stable investment that they can sell quickly if needed.

Negating the Stress of Real Estate Ownership

Finally, REITs offer a way to invest in real estate without the hassle and expense of owning property directly. REITs typically offer professional management and can provide exposure to a wide range of properties, making them an ideal choice for those who want to invest in real estate without the high costs and time commitment of property ownership.

Overall, REITs are a safe investment option for those looking to build wealth in 2023. As with any investment, it’s important to do your own research and consult with a financial advisor to determine the best investment strategy for your individual circumstances.

Non-Traditional “Safe” Investments

Here are five somewhat safe investment options that are not traditional. As a note, I don’t personally recommend investing in any of these, especially not with a wide breadth of knowledge and research into the ins and outs of the investment option. Some of these should be considered less investments and more gambling. Regardless, I feel it necessary to include them in this article.

  1. Peer-to-peer lending: Peer-to-peer lending platforms connect borrowers with investors who fund their loans. Investors earn interest on the loans they fund, while borrowers may be able to obtain lower interest rates than they would through traditional lenders. While there is still some risk involved with peer-to-peer lending, many platforms have implemented rigorous underwriting and risk management processes to minimize the risk of default.
  2. Cryptocurrencies: While cryptocurrencies such as Bitcoin and Ethereum have been known for their volatility, they can also offer a relatively safe investment option when approached with caution. Investing in cryptocurrencies involves doing thorough research, diversifying across multiple cryptocurrencies, and holding for the long term. Some financial advisors recommend allocating no more than 5% of your portfolio to cryptocurrencies.
  3. Sustainable investments: Sustainable investments, which focus on environmental, social, and governance (ESG) factors, have been gaining popularity in recent years. These investments may include stocks, bonds, or mutual funds that meet certain sustainability criteria. They provide a way for investors to align their investments with their values while potentially earning competitive returns.
  4. Royalty income investments: Royalty income investments provide investors with a share of the revenue generated by a particular asset, such as music or oil and gas royalties. While there is some risk involved with these investments, they can offer a relatively safe way to earn passive income.
  5. Collectibles: Collectibles such as art, stamps, and rare coins can offer a safe investment option for those who have a deep understanding of the market. While there is still some risk involved with collectibles, investing in rare and valuable items can provide a potential hedge against inflation and stock market volatility.

As with any investment, it’s important to do your own research and consult with a financial advisor before making any decisions.

Final Thoughts on Safe Investments

In conclusion, there are a variety of safe investment options available for Americans looking to build wealth in 2023. From traditional options such as savings accounts, certificates of deposit, and Treasury bonds, to newer options such as sustainable investments, cryptocurrencies, and collectibles, there is a diverse range of investment vehicles that can provide stable and low-risk returns.

Additionally, index funds and REITs offer exposure to a diversified portfolio of assets, helping to reduce risk and provide a hedge against market volatility. While no investment is completely risk-free, these safe investment options can provide a stable and reliable way to build wealth over time.

As with any investment, it’s important to do your own research and consult with a financial advisor to determine the best investment strategy for your individual circumstances.

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