I was just wondering if there were any conservative ways to save for retirement. I am currently 24 years old and I started my first salaried job out of college a month ago. I am extremely conservative with my money and I am not entirely comfortable with a 401k because it seems to me that I am gambling with my money.

That being said, I still did sign up for my companies 401k program and plan to put as much as they match to make the most out of it. But are there any more ways to save for retirement that are more conservative?

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    If you are saving money in dollars, you are gambling on the value of the dollar. All assets have values that go up and down, including the dollar. Jul 18, 2016 at 19:30
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    Just a heads up, if you're young, you don't want to be conservative. You have the time to be ... experimental ... with your retirement investing. When you have a few good upswings in a row, which is bound to happen some time in the next twenty years, then consider cashing out and putting into something more conservative.
    – corsiKa
    Jul 19, 2016 at 2:53
  • Actually, a 401K is conservative. The expected variance in the result is fairly low. This is a direct result of the long time period (>40 years here). There will be good and bad periods, but over decades that will average out.
    – MSalters
    Jul 19, 2016 at 11:21
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    @MSalters, a 401(k) is an IRS designated account wrapper providing certain tax benefits over other kinds of accounts, not an investment. You can pile all sorts of high risk positions in to a 401(k).....
    – quid
    Jul 19, 2016 at 16:59
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    "I am extremely conservative with my money and I am not entirely comfortable with a 401k because it seems to me that I am gambling with my money." If you are risk averse, make sure you factor in the risk of NOT investing in something that can make a decent return.
    – Kevin
    Jul 19, 2016 at 17:03

6 Answers 6


A 401(k) is just a container. Like real-world containers (those that are usually made out of metal), you can put (almost) anything you want in it.

Signing up for your employer's match is a great thing to do. Getting into the habit of saving a significant portion of your take-home pay early in your career is even better; doing so will put you lightyears ahead of lots of people by the time you approach retirement age. Even if you love your job, that will give you options you otherwise wouldn't have.

There is no real reason why you can't start out by putting your retirement money in a short-term money-market fund within that 401(k). By doing so you will only earn a pittance, probably not even enough to keep up with inflation in today's economic environment, but at this point in your (savings and investment) career, that doesn't really matter much. What really matters is getting into the habit of setting that money aside every single time you get paid and not thinking much of it. And that's a lot easier if you start out early, especially at a time when you likely have received a significant net pay increase (salaried job vs college student).

I know, everyone says to get the best return you can. But if you are just starting out, and feel the need to be conservative, then don't be afraid to at least start out that way. You can always rebalance into investment classes that have the potential for higher return -- and correspondingly higher volatility -- in a few years. In the meantime, you will have built a pretty nice capital that you can move into the stock market eventually.

The exact rate of return you get in the first decade matters a lot less than how much money you set aside regularly and that you keep contributing. See for example Your Investment Plan Means Nothing If You Don’t Do This by Matt Becker (no affiliation), which illustrates how it takes 14 years for saving 5% at a consistent 10% return to beat saving 10% at a consistent 0% return.

So look through what's being offered in terms of low-risk investments within that 401(k). Go ahead and pick a money-market fund or a bond fund if you want to start out easy. If it gets you into the habit of saving and sticking with it, then the overall return will beat the daylights out of the return you would get from a good stock market fund if you stop contributing after a year or two. Especially (but not only) if you do pick an interest-bearing investment, do make sure to pick one that has as low fees as you can possibly find for what you want, because otherwise the fees are going to eat a lot into your potential returns, benefiting the bank or investment house rather than yourself.

Just keep an open mind, and very strongly consider shifting at least some of your investments into the stock market as you grow more comfortable over the next several years. You can always keep a portion of your money in various interest-bearing investments to act as a cushion in case the market slumps.

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    When I started investing, it was recommended to me that I start with an index fund. These tend to be less interesting but will follow the "market average". You won't win big, but unless the entire market crashes, you shouldn't lose big either.
    – Vlad274
    Jul 18, 2016 at 19:28
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    @Vlad274 An index fund is often a good way to track the corresponding market index at minimal cost. For example, an index fund that tracks the US S&P-500 will, ideally, perform identically to the S&P-500. Index funds thus have exactly the same risk as the underlying market, which goes against the OP's current highly risk-averse investment strategy.
    – user
    Jul 18, 2016 at 19:44
  • Yeah, the "best return you can get" has no meaning when one can't "put money aside and forget about it".
    – bishop
    Jul 19, 2016 at 1:36

I didn't even have access to a 401(k) at age 24. You're starting early and that's good. You're frugal and that's good too. Retirement savings is really intended to be a set it and forget it kind of arrangement. You check in on it once a year, maybe adjust your contributions.

While I applaud your financial conservatism, you're really hamstringing your retirement if you're too conservative. At age 24 you have a solid 30 years before retirement will even approach your radar and another 10 years after that before you have to plan your disbursements. The daily, monthly, quarterly movements of your retirement account will have literally zero impact on your life.

There will be money market type savings accounts, bond funds, equity funds, and lifecycle funds. The lifecycle fund rolls your contributions to favor bonds and other "safer" investments as you age.

The funds available in retirement accounts will all carry something called an expense ratio. This is the amount of money that the fund manager keeps for maintaining the fund. Be mindful of the expense ratios even more than the published performance of the fund. A low fee fund will typically have an expense ratio around 0.10%, or $1 per $1,000 per year in expense. There will be more exotic funds targeting this or that segment, they can carry expense ratios nearing 1% and some even higher.

It's smart to take advantage of your employer's match. Personally, at age 24, at a minimum I would contribute the match to a low-fee S&P index fund.

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    > At age 24 you have a solid 30 years before retirement will even approach your radar and another 10 years after that before you have to plan your disbursements Maybe you do... I'm definitely not planning on working until 65, screw that :p. (I still agree with your assessment, though, just not with your specific numbers. Even 20 years is still plenty of time to not be so conservative and to target more of your investments to at least relatively safe ETFs like SPY or VTI.)
    – neminem
    Jul 19, 2016 at 20:44
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    @neminem 24+30 is 54 not 65.
    – RonJohn
    May 8, 2019 at 23:18
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    @RonJohn Yes, but 24+30+10 is. Well, it's 64, but that makes sense that you would start "planning your disbursements" the year before you retire. The statement was that the OP would have 30 years before he was even thinking about planning retirement, and another 10 years after that before he actually did.
    – neminem
    May 9, 2019 at 14:10

It has been hinted at in some other answers, but I want to say it explicitly:

Volatility is not risk.

Volatility is how much an investment goes up and down, risk is the chance that you will lose money.

For example, stocks have relatively high volatility, but the risk that you will lose money over a 40 year period is virtually zero (in particular if you invest in index funds).
Bonds, on the other hand, have basically no volatility (their cash flow is totally predictable if you trust the future of your government), but there is a significant risk that they will perform worse than stocks over a longer period.

So, volatility equals risk only if you are day trading. A 401(k) is literally the opposite of that.

For further reading: Never confuse risk and volatility

Also, investing is not gambling.

Gambling is bad because the odds are stacked against you. You need more than average luck to actually win and the longer you play, the more you will lose.
Investing means buying productive capital that will produce further value. The odds are in your favor. Even if you do a moderately bad job at investing, the longer you stay, the more you will win.


I'd say that because you are young, even the 'riskier' asset classes are not as risky as you think, for example, assuming conservatively that you only have 30 years to retirement, investing in stocks index might be a good option. In short term share prices are volatile and prone to bull and bear cycles but given enough time they have pretty much always outperformed any other asset classes. The key is not to be desperate to withdraw when an index is at the bottom. Some cycles can be 20 years, so when you need get nearer retirement you will need to diversify so that you can survive without selling low. Just make sure to pick an index tracker with low fees and you should be good to go. A word of warning is of course past performance is no indication of a future one, but if a diversified index tracker goes belly up for 20+ years, we are talking global calamity, in which case buy a shotgun and some canned food ;)


Dividend reinvestment plans are a great option for some of your savings. By making small, regular investments, combined with reinvested dividends, you can accumulate a significant nest egg. Pick a medium to large cap company that looks to be around for the foreseeable future, such as JNJ, 3M, GE, or even Exxon. These companies typically raise their dividends every year or so, and this can be a significant portion of your long term gains. Plus, these programs are usually offered with miniscule fees.

Also, have a go at the interest rate formulas contained in your favorite spreadsheet application. Calculate the FutureValue of a series of payments at various interest rates, to see what you can expect. While you cannot depend on earning a specific rate with a stock investment, a basic familiarity with the formula can help you determine a rate of return you should aim for.


Buy gold, real coins not paper. And do not keep it in a bank.

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    The ongoing insurance cost for the gold equivalent of a decent retirement fund would eat up quite a lot of its value!
    – pjc50
    Jul 19, 2016 at 14:52
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    Gold is also one of the most volatile investment classes there are. It may be a good addition to a well-diversified investment portfolio because it has positive correlation with very few other things you can invest in, but a big bag of gold coins and nothing else is not what you want for a retirement fund if your goal is low volatility, which the OP is clearly after.
    – user
    Jul 19, 2016 at 15:00

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