Safest IRA Investments

Safest IRA Investments

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When investors ask, "Which IRA investments are the safest?" they get different answers. That's because the definition of the word "safe" can be pretty wide-ranging. However, there are millions of folks planning for retirement who care more about protection against loss, theft, fraud, hacking, and other events than about earning a high interest rate on their retirement accounts.

Safety comes with a price of its own, namely low interest rates. That's why all the safest IRA investments deliver relatively or very low payoffs, even over the span of many years compared with other choices. Professionals call this the "risk-return tradeoff" because when one side of the equation goes up, so does the other.

With high risk comes the potential for higher returns. Low-risk investments usually come with quite low rates of return. Consider the following three choices for individuals who want the safest possible place to park their retirement assets.

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Safest IRA Investments

U.S. Bonds

The term "bonds" usually refers to several different financial instruments, all of which are issued by the federal government. They include Treasury Bonds, Treasury Notes, Treasury Certificates, and Series I Bonds. All come with their own set of provisions, minimum investment amounts, and other features.

But they all have one very important characteristic that puts them on anyone's "safest IRA assets" list: They're backed by the U.S. government. The only way these instruments fail is if the U.S. government goes into financial default. You can buy them from a broker, bank, or directly from the government's Treasury website.


  • Easy to find and buy.
  • Minimum prices vary, but almost anyone can add bonds to their portfolio.
  • One of the absolute safest places to hold retirement money because the U.S. government backs bonds with its “full faith and credit”.


  • Low interest rates in the 2% range do not allow for outpacing inflation in most years.
  • Series I Savings bonds pay higher face-amount interest and are indexed to the inflation rate. However, I-Savings bonds come with time provisions that penalize people who withdraw the funds early. Finally, investors are limited to buying no more than $10,000 of I-Savings annually.
Safest IRA Investments

Dividend Aristocrat Stocks

Stock prices rise and fall, but over the long run, the very best, most stable corporations' shares can be an excellent choice for anyone who wants a healthy dose of financial stability along with a decent potential rate of return. The so-called "dividend aristocrats" are mostly blue-chip stocks that have paid regular dividends for at least 25 consecutive years.

While they're probably the least safe among the top 4 safest investments for IRAs, they tend to be much safer when held for many years, and they offer the highest potential interest of the four choices in the category. If you are considering adding aristocrats to an IRA, consider the following points:


  • Potentially high overall returns based on appreciation of value and regular dividend payouts.
  • The assets are highly liquid, so there’s never a worry about selling them, converting them to other in-IRA assets, or making withdrawals from the retirement account in cash.


  • Stocks can decline in value, particularly during economic downturns, recessions, and global financial instability. And there’s no guarantee that dividend payments will continue. Companies can and do drop off the “aristocrat” list on occasion.
  • It’s almost a necessity to hold other, less volatile assets in your IRA if you have a large percentage of dividend stocks as the main component of the portfolio.
Safest IRA Investments

Money-Market Funds

Money-Market funds, usually called M.M.s or just "money markets," are actually a special type of mutual fund that holds extremely safe government-based securities. All their holdings mature in one year or less, and you can purchase them from brokers or directly from mutual fund companies.

Like bonds, M.M.s are a high-security, low-interest way to save for retirement. Review the pros and cons to see if M.M.s are right for your portfolio.


  • Investors can buy M.M.s quickly and easily for almost any amount from their favorite brokers or from the companies that issue the instruments.
  • They are safe because the federal government backs all their component parts, or else they are “cash equivalents.” So, there’s no real worry about default or losing your original investment.


  • They’re very short-term instruments, so you’ll have to repurchase them annually, which can be a hassle. In reality, M.M.s are only a smart choice for folks who want to park some cash in a safe location for a few months.
  • Like most U.S. government-backed instruments, M.M.s come with very low interest rates, currently in the 2% or lower range. For long-term appreciation of an IRA, they are not a good choice due to the fact that they rarely keep up with inflation.
Safest IRA Investments

Gold & Other Precious Metals

Gold, platinum, silver, and palladium, the four precious metals (P.M.s), have a lot going for them. Not only is gold one of the most popular choices among today's retirement planners, but there are special laws that allow individuals to hold tangible gold and other PM forms of bullion, coins, bars, and rounds in their IRAs.

For safety, gold, in particular, features a long history of rising value, the ability to deliver protection against inflation, and a reputation as a safe haven in bad economic times. The safety factor depends on which precious metals dealer you buy from, what company you use as an IRS-approved custodian and the reliability of the storage facility.

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Overall, gold and the other P.M.s certainly make the cut-off point for being on the list of safest IRA investments, especially for seniors. Here's a look at the pros and cons of P.M.s, but of gold especially.


  • Investors can work with reputable PM dealers, custodians, and vaulting companies.
  • Gold tends to hold its value over the long run, can out-perform stocks in weak economies, and is a good hedge asset against inflation.


  • There are premiums on purchases because few dealers sell gold and other metals at the spot price.
  • In good or thriving economic times, gold can remain at the same price level for a very long time.

Final Verdict

The word "safest" is subjective, which is why it's impossible to name one investment as being number one in the safety category. For some IRA account holders, bonds will be the most attractive, while others will prefer the safety of precious metals, money market funds, and blue chip stocks that pay dividends.

Use your own risk tolerance as a guide to finding the safest IRA investment for your portfolio. Keep in mind that there's no requirement to select just one category. It can be wise to assemble a balanced retirement portfolio that includes bonds, money market funds, precious metals, and dividend stocks as a way to gain a modest interest rate along with a very high degree of safety.