Definition of Low Risk Investment





What is a "low risk investment"? What is the definition of the term "low risk investment"?

A "low risk investment" is an investment in which there is thought to be just a small chance of losing some or all of your money.

Typically, a "low risk investment" has a low amount of upside. On the other hand, a "high risk investment" has a high amount of risk and usually a high potential reward.

Definition of Low Risk Investment - Financial DictionarySome examples of "low risk investments":

-US Treasury securities
-AAA rated corporate bonds
-money market accounts
-dividend funds

Now, these are all "low risk investments", meaning that there is a low probability of losing some or all of your money. As you can probably see from the four assets listed above, you will not see much of a return on your investment if you decide to put your money into any of the "low risk investments" listed above.

It's important to mention that any asset has SOME degree of risk, no matter how "low risk" it may seem. Anything could happen - countries that used to have pristine credit ratings are now on the ropes thanks to the financial crisis of the last 4-5 years. Nothing is ever 100% safe.




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