Investing is about balancing risk and reward. Any good investment will typically allow for nominal risk for a healthy return, but let's suppose that's not what I'm looking for. I want something with no risk, provided no armageddon-like scenarios (US defaults on debt, government collapse, etc.) occur. I might invest in CD's which max out around 1%, T-bonds which max out around 2%, and some FDIC-backed savings accounts offer yields up to 2.5%.

What is the highest-return investment with functionally zero risk?

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    @SSpring T-bonds are risk free if you hold them to maturity (there is zero variation in the cash flows). There is opportunity cost if the market moves against you but that does not impact the holders' cash flow (unless they sell).
    – D Stanley
    Mar 18, 2021 at 0:34
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    So it depends on how you define "risk". In finance "risk" generally means variance in returns. Since t-bonds pay a fixed interest and have no default risk they are considered "risk free". Yes there can be opportunity cost as I mention but that's not considered "risk" in this sense. Inflation is also not considered a risk generally since it affects all investments in that currency.
    – D Stanley
    Mar 18, 2021 at 1:05
  • If un-hedged, I recommend tickers STIP, NEAR, MINT, and possibly BKLN. In fact I don't see how anyone holds Treasury Bonds long-term except with a futures trading operation of hedging or with a practice of continuing cost-averaging. The AB Income fund was previously a leveraged and hedged Treasury fund but now as an open-end-fund they just mostly mix Treasuries with high-yield. Ticker WIW is leveraged and hedged TIP's. Wow, ticker TLT is down 14.1% year-to-date while WIW is down 1.7% year-to-date.
    – S Spring
    Mar 18, 2021 at 1:57
  • @SSpring I still think we're defining "risk" differently. All of those can have varying returns depending on inflation (or deflation). With t-bills you know exactly what your return would be if held to maturity. If I need X dollars in 5 years I know I can buy Y dollars in T-bills now and rest assured that I will get it. I can't do that with STIP. The purchasing power of X in 5 years being unknown is irrelevant in this context. It's not unimportant in reality, but it's not relevant in terms of risk.
    – D Stanley
    Mar 18, 2021 at 13:53
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    @DStanley In this case, I think the discussion about the different interpretations of risk and the implications of each is probably far more helpful than choosing one definition over the other Mar 18, 2021 at 15:01

2 Answers 2


There is no zero risk.

If you exclude some less probable developments from your analysis, some investments seem risk-free, but the ‘highest’ risk-free is simply the last one you exclude.

In other words, you ask “what is the largest number if I exclude all above N?” - well, then the largest remaining number is N-1…

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    I'm pretty sure you know what the asker is asking.
    – AakashM
    Mar 18, 2021 at 9:33
  • +1, although "if I exclude all above N", surely that leaves N? (N is not above N).
    – TripeHound
    Mar 18, 2021 at 10:29
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    This is very insightful. I implicitly excluded certain types of risk, and didn't recognize the arbitrary nature of that decision. Your metaphor of “what is the largest number if I exclude all above N?” is spot on, though I'd imagine perhaps not so clear for many readers. The clear value of this answer notwithstanding, it doesn't really address the question, as it's really just a comment on the inherent conflict in answering such a question. If you could expand it out to include a discussion on risk associated with specific investments, I'd be most appreciative :) Mar 18, 2021 at 15:12

The instruments that are considered "risk-free" in an economy are government bonds in that country. So in the US, US Treasury bonds are considered "risk free" if you hold them to maturity because there is zero variance in the cash flows you receive. The government will not default (they can borrow or print more to pay you off) and the cash flows are fixed.

You might find vehicles like the savings accounts and CDs you mention that pay more than T-bills, but they generally come with a catch (minimum balances, limits on withdrawals) that affect their liquidity.

  • The key here is that in finance "risk" means "variance in returns", but in colloquial use it means "possibility of something bad happening". When we say "risk-free" we mean the first kind of risk.
    – Nobody
    Mar 18, 2021 at 13:52

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