Safe Money: A Guide to Growing Your Money Safely


There are many safe money sources out there, but not all of them are created equal. Not all of these “safe money” guides give you the full picture or other details that may factor into your financial decisions. For example, many safe money options won’t protect your assets from the effects of inflation. Other safe money options may come with additional risks that their issuers might not tell you upfront.

In this article, we will go over safe money options to grow your retirement savings safe and sound. You have a variety of safe money options to accumulate money for your golden years, but their value can differ based upon your situation, need for liquidity, potential for growth, and more.

Let’s cover more of your safe money options available to you now — and how some safe money vehicles stand out more than others in different ways.

What Is Safe Money?

Safe money isn’t a specific asset class in and of itself. Instead, it’s a financial philosophy that focuses on the growth of your money while also preserving your hard-earned savings against market risk.

In a word, safe money is all about low-market-risk growth. The goal of safe money is for your money to grow but not suffer losses.

With that being so, most safe money vehicles bring you reasonable growth potential but also come with low risk. Some examples of safe money solutions include fixed annuities, fixed index annuities, government bonds, investment-grade corporate bonds, and other fixed-interest assets.

How Does Safe Money Work?

Safe money is about growing assets with minimal risk. Safe money retirement savers generally look for low-risk places to grow their money with principal protection. They may also seek safe money instruments for other reasons, including guaranteed income for a set period or life.

Safe money involves putting your money in a variety of generally low-risk assets that have little volatility, meaning your original investment is preserved. Some safe money assets have grown more than others, so it pays to look at their historical performance before deciding on which assets to commit your money to. Keep in mind that historical results may not represent future results as well.

What Are the Pros and Cons of Safe Money Options?

For one, low risk can mean limited growth potential. You won’t see the returns that those who invest in the stock and bond markets do when the markets do well.

These sort of saving and investment options often aren’t as liquid as higher-risk assets, although many of them offer some liquidity. Most annuities will give you some liquidity via free withdrawals, which let you take up to 10% of the contract value per year. But withdrawals in excess of that are subject to surrender charges for the annuity’s maturity period.

For example, say that you put $100,000 into a fixed index annuity and the maturity period was 10 years. During that decade, you may not be able to withdraw more than $10,000 per year without paying a penalty on any amount withdrawn above this level.

With safe money options, their value may not go up and down in big swings. However, they usually aren’t as exciting as higher-return-potential investments. The trade-off for this is that your principal is protected in the years of losses.

What Are Your Safe Money Options?

Here are a few safe money options that you might consider:

Certificates of Deposit

CDs are commonly viewed as a highly credible safe money option because of their FDIC backing and their guaranteed interest rates. The key shortcoming of these instruments is that they aren’t safe from inflation risk, which may outpace the interest rates that CDs pay.

Money Market Funds

Money market funds have become a favorite haven for conservative investors because of both their safety and their liquidity. But these funds have historically paid among the lowest interest rates of all types of safe money vehicles over the past several years.

U.S. Treasury Securities

Few things may give folks peace of mind like having their money backed by the ‘full faith and credit’ of Uncle Sam. But while the interest of U.S. Treasury securities is exempt from state and local taxes, their interest rates tend to be lower than the rate of inflation over time.

You might look into alternative options, such as I-bonds or Treasury Inflation Protected Securities (TIPS), to combat inflation over time. That being said, their interest rates aren’t set as other Treasury securities or bonds are.

Investment-Grade Corporate Bonds

Investment-grade corporate bonds can provide a higher rate of interest over time with a very reasonable amount of risk. For example, a bond issued by McDonald’s Corporation will generally have a higher interest rate than a Treasury security.

Of course, McDonald’s doesn’t have the authority to print money or raise interest rates, but then, rhetorically speaking, who in this world can operate according to a budget and still make a profit?

Corporate bonds with high financial ratings can provide investors with higher rates of interest with that lower-risk profile.

Fixed Annuities

Fixed annuities are one of the lowest-risk types of instruments that you can put your money in today. They aren’t FDIC insured and don’t have the direct backing of the U.S. Treasury, but they arguably don’t need to.

All fixed annuity carriers are required by state law to have at least one dollar of cash reserves for each dollar of outstanding annuity premium that they issue. Most fixed annuity companies carry surplus capital above this dollar-for-dollar reserve requirement. This has helped these insurance companies remain strong in all sorts of economic and market conditions, such as the Great Depression and the financial crisis.

Fixed Index Annuities

This type of annuity doesn’t necessarily have a guaranteed rate. But it can earn interest that is calculated in part based on an underlying benchmark index.

Fixed index annuities were designed to grow more than bonds, CDs, fixed annuities, and other fixed-interest options. Historically, they have tended to earn interest that is within that range.

Interest earnings from a fixed index annuity makes them attractive for those seeking growth that can keep up in part with inflation over time. Their growth potential is limited by caps, participation rates, and other limits, but the trade-off is that your principal and interest earnings are locked in when the linked index goes down in value.

Immediate Annuities

Immediate annuities are built purely for guaranteed income. They have a track record of paying guaranteed streams of income over decades – and a track record going back centuries.

When interest rates rise, the return on capital that these annuities can pay, in the form of a set income amount, will rise as well. One downside is that when you turn on your immediate annuity income stream, the decision can’t be taken back.

Savings Accounts

While savings accounts are under the umbrella of the FDIC, they aren’t known for paying competitive interest over time. Many seeking higher yields will also diversify in other assets that can help their money grow more.

Municipal Bonds

Investors who are in high tax brackets often look to municipal bonds as a safe haven for their money. Many municipal offerings are backed by federal insurance, so the risk of default is minimized. The tax-free income that they produce can also be attractive.

Is Safe Money Right for You?

Some safe money options might be right for your situation. It depends on where you are financially, what your goals are, and what you anticipate your lifestyle will be in retirement. Safe money offers a variety of options to generate reliable retirement income and growth of assets while preserving your hard-earned money.

Ask your financial advisor about the pros and cons of your safe money options today. There will often be cases where a diversified strategy with a mix of market-based investments and safe money instruments are appropriate.

Your financial advisor can help you to determine which types of financial options best match your own risk tolerance and time horizon. Are you looking for a financial professional to help you create a personalized strategy? Or perhaps you want a second opinion of your existing plan.

For convenience’s sake, many independent financial professionals are available at You can visit with one and talk about your goals, situation, and concerns at no obligation to you. To get started, use our “Find a Financial Professional” section to connect with someone directly. Should you need a personal referral, please call us at 877.476.9723.

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