Which type of investment is considered to have low risk?

Bonds are often considered to have low risk compared to other investments because they represent a loan made by an investor to a borrower, typically a government or corporation. When you purchase a bond, you are essentially agreeing to lend money for a certain period, with the promise that the borrower will pay interest at specified intervals and return the principal amount upon maturity.

Government bonds, in particular, are known for their safety, as they are backed by the full faith and credit of the issuing government. This makes them less prone to default than stocks, which can be more volatile and subject to market fluctuations. Corporate bonds carry slightly more risk but often still come with a better risk profile than equities, particularly when investing in bonds from stable, well-established companies.

Other investment types, like real estate, while generally viewed as having potential for both appreciation and rental income, come with risks related to market conditions, property management, and maintenance costs. Stocks have higher levels of volatility and can see significant price swings based on market sentiment, company performance, and economic conditions. High-yield savings accounts offer safety and liquidity, but their returns are often lower than those associated with bonds, making them less attractive for long-term growth compared to bonds.