by Christopher E. Mediate

From 2020 to now, the stock market has been as unpredictable as it’s ever been. Market corrections, tight interest rates, inflation, global unrest, and much, much more. All of which have had their fair share of effects on the market. When dealing with market volatility, it’s important to revisit your risk tolerance. Meaning, how exposed are you to all of these changes? What does your portfolio look like? What stage of life are you in?

Let’s face it, if you’re near or past retirement age, there’s not much need to jeopardize your earnings. Your time horizon has shortened, there is not much need to expose your portfolio to innovation or risky investments as a whole. So, what should you do? Well, I can’t tell you what to do, but I can fill you in on some lower risk investment options you can consider in order to lower your risk. Check them out below:

High-Yield Savings Accounts

These accounts are self-explanatory. They are FDIC-insured and earn rates greater than your traditional savings accounts. If you’re looking to save in the short term while also wanting speed account growth, this tends to be a solid option. Check for different interest rates at different banks. Be aware that you might be subject to penalties for withdrawals or too many transactions.

Certificates of Deposit (CDs)

One of the investment options available because a fixed amount of money can be put away for a fixed amount of time to generate a guaranteed return. But be aware of penalties if you need to withdraw the money before the fixed term is over. Those surrender charges can be hefty.

Treasury Bills, Notes, Bonds and TIPS

These are fixed-income securities offered by the government and are good options for short-term investments. They are not FDIC-insured, but you are investing with the government so getting your money back is close to a guarantee – as long as it’s held to maturity.  To summarize, you are lending the government money, and in return they pay you back in the form of fixed interest over a set period of time, A.K.A. until it matures. Maturity lengths vary based on the bond type.

Dividend-Paying Stocks

There are some stocks that are capable of paying you dividends. Dividends usually occur when a company has a surplus in earnings (a really good year or quarter for instance) and decides to redistribute some of those earnings back to their shareholders, which in this case would be you – the shareholder. However, be careful with these kinds of stocks. There’s no guarantee for a risk-free return because a company could decide to change policy and stop paying dividends, but they are generally less risky because shareholders will still receive dividends even when the market isn’t doing well.

Money Market Accounts

These are a type of savings account, but typically offer higher interest rates and incentives the more money you deposit. They’re FDIC-insured up to $250,000 and offer more liquidity than CDs, but there is a minimum balance that must be maintained and there could also be monthly fees or restrictions on the number of transactions you can make.

Fixed annuities

These technically fall under the “safe investments” category, but they are contracts that offer guaranteed returns for a period of time. These tend to be pretty popular amongst retirees who are looking for something with a safe, fixed return on their investment that is guaranteed to supplement their retirement income. You may be penalized if you withdraw funds too early and it’s important to understand the rules and policies associated with these products.

This is for educational purposes only. No specific investment advice is ever intended. Financial products and services can vary significantly. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives.

Investment Advisory Services offered through Mediate Financial Investment Advisory Services, LLC, a State of Ohio Registered Investment Advisor.

Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.