What are Some Low Risk Investments UK?

Jitanchandra Solanki
6 Min read

Every form of investing involves risk. However, some investments are considered to be low risk and some high risk. In this article, we explore the differences and how to identify some low risk investments.

It’s worthwhile pointing out that what is considered to be low or high risk will vary between individuals with some forms of investing simply not suitable for some. Therefore it’s important to identify and stick to your own risk tolerance levels.

Best Low Risk Investments UK 

  1. Savings accounts 
  2. UK Government Bonds 
  3. ETFs (exchange traded funds but only when compared to stocks) 

1. Savings Accounts 

While putting your money into a savings account is not necessarily considered an investment it is still an option for those who want their capital to grow in a low risk way. This is because your cash is held with a UK bank that is authorised and regulated to hold that cash in the safest way possible.

New laws and regulations since the 2008 financial recession on how banks have to hold your capital and cover their deposits make it one of the lowest risk places to put your capital. But while a savings account may be considered low risk, your investment return is likely to be very low as banks tend to offer only very small interest on your capital.

Even with rising interest rates since the pandemic, rates do not match the pace of inflation (the change in the value of the price of goods and services).

2. UK Government Bonds 

When investing in a government bond you are effectively lending money to the government for a fixed period. At the end of this fixed period, you will receive your loan amount back and receive an interest payment known as the ‘coupon’ payment.

Government bonds are seen as a higher risk than a savings account but not as high risk as investing in stocks. This is because there is some risk if the UK government default on their loans and you do not get your initial investment back.

Bonds are given a credit rating by rating agencies such as Standard & Poor's. This metric is used by pension funds and investment funds to judge the creditworthiness of a country and whether it is safe or not.

3. ETFs (Exchange Traded Funds) 

ETFs are considered to be low risk but only when compared to investing in individual stocks. This is because an ETF is like a mutual fund which works on the concept of ‘pooled investing’ and diversification).

An ETF is a basket of securities (stocks, bonds, currencies, commodities) that can be traded on a stock exchange. ETFs are bought and sold like a company stock when the stock exchange is open. There are a variety of different ETFs such as index ETFs, commodity ETFs, bond ETFs, sector ETFs and others.

As ETFs invest in a basket of different securities they are considered to be lower risk than purchasing stock of an individual company. This is because an ETF provides diversification so if one company’s share price crashes this could be offset by other companies whose share price is performing well.

But ETFs are considered to be higher risk than UK government bonds and a savings account because if all the securities in the ETF do not perform well then the value of the ETF will tumble along with your investment.

Are Stocks Low Risk Investments? 

Investing in shares of publicly traded companies is now much more accessible than ever before. Many blogs and social media content will mention that stocks such as Netflix rose more than 140% from the pandemic to 2022. 

This, of course, is a phenomenal – and not typical – return. However, they may fail to mention that the stock fell nearly 80% during 2022 putting the initial investment from the pandemic in a loss. The stock did recover some ground in early 2023.

The reason why stocks aren’t considered to be lowest risk investment is because of this level of volatility. Most newbie investors are not used to seeing wild fluctuations in profit or loss which is why building an investing portfolio is much more about psychology, risk management and patience.

While some investors will educate themselves and train themselves to identify the best low risk stocks to invest in, some may choose to invest in an index ETF such as the Vanguard FTSE 100 ETF.

This fund tracks the performance of the largest 100 shares listed on the London Stock Exchange and can give a broader diversification to the UK stock market. However, if you prefer to learn and train yourself in stock investing it is wise to start with a practice trading account (a demo account) so you practice your skills in a virtual environment until you are ready to go live.

Trade with a risk-free demo account

Practise trading with virtual funds

FAQs on Low Risk Investments UK 


What are low risk investments?

Low risk investments are investments that carry very little risk to losing your entire capital. With all forms of investment there is always some risk which can be categorised from low to high.


What are some low risk investments?

Low risk investments can include savings accounts, government bonds and ETFs (but only when compared to investing in individual equities).

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