The Best Safe IRA Investments for 2022

October 8, 2021

Worried about risking your money in the market? There are safe investments out there. Here’s a look at the safest IRA investments you can choose.

For those of us hoping to retire comfortably (every investor, in other words), savings accounts just aren’t going to cut it. According to the FDIC, the national average interest rate for savings accounts is 0.04% APY.

To put that in context, let’s say you drop $1,000 in a savings account. At the end of the year, that would return you four cents in interest. In fact, with an interest rate like that, you would have to have $25,000 in savings just to see $1 annual interest returns. That compound interest gets you nowhere.

Still, even with the gains you can see through IRA investments, there is one benefit to savings accounts: you won’t lose money. The good news is that there are safe investments that allow modest growth without too much risk, which is critical for risk-averse investors and those nearing retirement. Here are some of the safest IRA investments available today.

What Can You Invest in an IRA?

First, it’s important to understand what you can invest in an IRA. Fortunately, that answer is easy: practically anything.

Your IRA is basically a tax-advantaged wrapper to package investments. The tax-advantaged status of the wrapper has no impact on the investments contained inside, which leaves you a great deal of freedom to choose investments as you like. In fact, most advisors will simply list the disallowed investments with an asterisk that pretty much anything else is allowed.

Here’s what’s not allowed in an IRA:

  • Life insurance (with a small exception for qualified plans)
  • Most coins
  • Art, antiques, and collectibles
  • Derivative positions (not against the law but usually against the rules of advising firms)
  • Real estate for personal use

Other than those investments, you can toss practically anything in an IRA.

Safe IRA Investments

That said, some investments are safer than others. Here are some of the safest investments you can hold in an IRA.

Keep in mind that this is not an all-inclusive list, and there are some highly safe investments that are not listed here, not so much because they’re not allowed but because it doesn’t make sense to muddle them with an IRA (like high-yield savings accounts). This is not to say that you shouldn’t look into those investments, just that you can’t hold them in your IRA. Also, keep in mind that the right safe investment for one investor may not be the right choice for you—it depends on your investing goals.


Bonds are among the safest investments on the market. A bond is basically an IOU in security form—it’s a debt security allowing someone to borrow money from you for a fixed period. The borrower agrees to pay a fixed interest rate over the life of the bond, plus the original balance once the bond reaches maturity.

There are four main types:

  1. Corporate bonds (issued by private corporations)
  2. High-yield bonds (bonds with a lower credit rating, greater risk, and thus higher interest rates)
  3. Municipal bonds (bonds issued by cities, counties, states, and similar small government entities)
  4. U.S. Treasury bonds (bonds issued by the U.S. Treasury on behalf of the U.S. government)

Bonds are a popular capital preservation technique used to offset the risks of stocks. They provide predictable income twice per year. Plus, municipal bonds are generally exempt from federal income taxes (and may even be exempt from state and local income taxes too).

Out of all the bonds on the market, U.S. government bonds are considered the safest investments in the world. You can buy them from a broker in $100 increments, or you can purchase them from Treasury Direct. If you’re not interested in buying bonds directly, you can also work with a bond mutual fund. Of these funds, the safest are government bond funds, municipal bond funds, and short-term corporate bond funds.

A Conservative Mutual Fund

If you want some of the growth of the stock market without the risk or the hassle of buying bonds directly, you can work with a mutual fund.

To be clear: mutual funds are considered a largely safe investment, but you get the safest results from a conservative mutual fund that also accounts for negative factors. These include expense ratios, front-end and back-end load charges, diluted returns, and limited control over investment decisions. Pay careful attention to how your mutual fund handles these issues, as they will affect your returns.

Certificates of Deposit

You might not think an IRA can hold a certificate of deposit, given that a CD is basically a savings account that holds a fixed amount of money for a fixed period of time while the bank pays interest until maturity. But you can use IRA contributions for a CD—IRA CDs are a thing, the only difference being that you use funds from your IRA instead of a savings account. Remember, your IRA is just a container for other investments.

For those who have zero risk tolerance, IRA CDs are attractive. You’ll know exactly how much money you’re getting back, and you don’t have to worry about fees unless you pull from the CD before it matures. You can even build a CD ladder by layering CDs with different term lengths.

Keep in mind, though, that CD yields are low. A high-yield CD will only yield 3.5% APY. But you know exactly what you’re getting, and if the CD is FDIC insured, you’re guaranteed to get your money even if the bank shutters.

Make the Most of Your Retirement Investments

We get it. Saving for retirement is hard, and with the economy in flux, it can be scary to put your money in the market. But with the safest IRA investments, you can preserve the money you already have with some growth around the edges.

Here at Masterworks, we believe that great investing should be accessible to everyone—like blue-chip art investing. Ready to invest in the future you want? Fill out your membership application to learn more or keep reading our blog for more great tips to learn the ropes of investing.

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