What are the Best Low-Risk Investment Ideas in UK

If you live in the UK and want to invest some cash in the financial markets, you have thousands of options that ensure Low-risk and are considered as low risk investments . This includes everything from stocks, bonds, ETFs, mutual funds, and more. But what type of investment is right for you and your personal financial goals?

Although the UK economy has broken through its 2020 lows, there may still be some bumps in the rest of 2021 and beyond. The stock market rallied quite a bit in the second half of last year and has been hot since then. However, investors should remain disciplined in case the market calms down or inflation continues to rise. Building a portfolio that includes less risky assets can help mitigate future market volatility.

If your goal is to preserve your principal and maintain a steady interest income then you should go for a low-risk investment.

However, if you are looking for growth, you should consider an investment strategy that aligns with your long-term goals. Stocks are very risky investment but one segment of stock i.e. dividend stock is not that risky as constant dividend reduces the risk.

This page takes a look at the best investments available to UK residents. We will also guide you through how to log in to an FCA-regulated online investment platform.

What is a Low-risk investment?

Low-risk investments minimize financial risk. This means that under normal market conditions, the amount you can lose is small compared to other forms of investment. There is no strict definition of “low risk” as it is tolerant of financial loss. However, low-risk investing in the UK has some disadvantages compared to investing in individual stocks in general.

Remember, low risk doesn’t mean any risk. In rare cases, a low-risk investment can lose more money than an investment that looks riskier. For example, the US government can default on Treasury bills and suffer significant financial losses. However, this is considered low risk because the US government has never defaulted before and the likelihood of such an event is very low.

For example, if you buy shares of a company , you can lose 20% or more of your investment if the company goes into trouble or the market crashes. As a low-risk investment, you can expect a loss of 10% or less even if the price goes down.

Things to consider

Different scenarios can be developed depending on the degree to which you are willing to take the risk.

  • No risk: No risk means you won’t lose a single penny of your capital.
  • A little risk: It’s reasonable to say that over time you’ll break even or make a small loss.

However, there are two pitfalls. A low-risk investment yields lower returns than can be found elsewhere at risk. Inflation can weaken the purchasing power of money hidden in low-risk investments.

If you only choose low-risk investments, you are more likely to lose your purchasing power over time. Because of this, low-risk games are also ideal as a reserve for better short-term investments or emergency funds.

Top 10 Low-Risk Investments 2021

There are so many financial instruments are available in the market that ensures low risk and good return to the investors. Few of them are-

  1. S&P 500 Index
  2. FTSE 100 Index
  3. Amazon Stocks
  4. High Yield saving account
  5. Corporate Bond
  6. Government bonds
  7. Gold
  8. Fixed Annuity
  9. Dividend-Paying Stock
  10. Money Market Accounts

S&P 500 Index

S&P 500 index low-risk investment

The S&P Index Fund tracks stocks of the 500 largest publicly-traded companies in the United States. The S&P 500 has been the benchmark for measuring other stocks for decades.

Since its inception in 1957, the index has returned an average of 10% per year. The S&P 500 consists primarily of large-cap stocks listed on the NYSE and NASDAQ, giving you access to the major players in the US economy.

In return, you have the opportunity to diversify your capital across a variety of industries and markets. For example, we are talking about companies like Apple, Amazon, Facebook. Berkshire Hathaway, Alphabet, and more. As you can imagine, there are many benefits to choosing the S&P 500 as a long-term investment. Buying this capital first gives you access to stocks of 500 companies in various industries.

Second, when you invest your money in S&P index, you no longer have to worry about the market or constantly monitor its performance. The main reason is that the S&P indices are re-balanced every three months to allow all companies in the index to justify their positions.

FTSE 100 Index

FTSE100 index low-risk investment

The FTSE 100 index can be viewed as the UK equivalent of the S&P 500. As you can imagine, we focus on the UK’s top 100 companies that have withstood testing over time.

Investing in an index fund that tracks the FTSE 100 is one of the best ways to dive into the wider UK economy. By investing in FTSE 100 index you can own the shares in multinational companies and banking institutions such as RBS, BT, BP, Berkeley Group, and Barratt.

In terms of the underlying framework, the FTSE 100 behaves almost identically to the S&P 500. Simply put, a single investment means you can acquire shares in 100 different companies. This also means you are eligible for dividends. FTSE 100 index is calculated every quarter to check the performance. However, it is worth noting that the S&P 500 index outperforms the FTSE 100. However, it is important to understand that neither the S&P 500 nor the FTSE 100 are risk-agnostic. However, both funds have demonstrated stable growth over time.

Amazon stocks

amazon low-risk investment

There are several reasons why this US-listed stock is popular with UK investors. Amazon shares are going up since the Covid-19 pandemic happened and the investors are getting huge return.

At the time of its initial public offering in 1997, Amazon stock was valued at $1.70 (adjusted for various stock splits). Moving on to August 2021, we can see an astonishing price of $3,227 per share. The company is a good example of long-term growth and value investing that have delivered on promises.

The sudden shift to online shopping and streaming services only increased Amazon’s value in the global marketplace. In the first 10 months of 2020, Amazon stock is up more than 80%. However, it’s worth noting that Amazon chose not to pay a dividend and reinvest its profits into the startup. Therefore, the only income you can get from buying shares in this company is capital gains.

High Yield Saving Account

High Yield Saving Account low-risk investment

Although not technically an investment, a savings account provides a decent return on your money. You can find the most profitable options by doing an online search and you can earn a little more if you are willing to check the price list and compare.

Savings accounts are completely safe in that you never lose money. Most accounts are federally insured for up to $250,000 per account type per bank, so you can get your money back if your financial institution goes down.

Putting money into a savings account is one of the safest investments. A savings account allows you to consistently receive interest on your investment and is guaranteed by the UK government as a deposit. By putting money in saving accounts you reduce the risk of losing the money, there is zero risks in saving accounts.

Another advantage of a savings account is that you can always withdraw money in cash. Many investors use savings accounts as temporary storage to save money between investments, but they are also valuable as long-term investments.

Corporate Bond

corporate bond low-risk investment

Corporate bonds can be a good choice if you are willing to take a slightly low risk for a higher return. Issued by traditional high-yield companies, these bonds typically offer higher returns than government bonds or short-term money market accounts.

High-quality corporate bonds are relatively safe, but you can lose your investment if:

  • Interest rates are rising- Your money will not get the highest interest rate because the interest rate that bonds pay is usually fixed for a certain period. If you have to sell your bonds, you may have to sell them at a price lower than you could have paid if the additional interest rates were raised. If you hold the bond to maturity, you get a refund of its face value plus interest.
  • The issuer goes bankrupt- The investment bonds are considered as a safe investment as compared to saving accounts but sometimes investors can face losses in case of bankruptcy of the issuers. Because of this, it’s important to focus on bonds from higher-rated companies that are more likely to be repaid. A company with a lower rating may offer a higher interest rate but are also more likely to incur losses.

Investors should choose the bonds for the long term to avoid interest rate risk. To reduce the risk of default, investors can choose high-quality bonds from well-known conglomerates or purchase funds that invest in a diverse portfolio of these bonds.

Government Bond

Treasury bonds, or government bonds, work in the same way as corporate bonds. The difference is that government bonds are backed by the government. For example, you can invest in bonds issued by the UK governments and communities.

Like corporate bonds, government bonds pay a fixed interest rate and have a certain period. You should always check your issuing government’s credit history to make sure you’re paying off on time. In general, Treasury bonds are considered very low risk if they are issued by a national institution such as the UK government or other government.


gold low risk investment

Gold is one of the best low-risk alternative investments for balancing stocks on the stock market. Generally, when the stock market goes down, the value of gold goes up. Historically, the value of gold has almost always increased in the long run. Financial advisors strongly recommend this safe investment, especially if your portfolio consists primarily of stocks and bonds.

This expensive metal has always been very attractive to investors, making it one of the preferred long-term investment options among UK traders. It also has a reputation as one of the best assets to protect against market downturns.

There are several ways to invest in gold. The simplest way is to buy physical gold, but it’s not always a practical solution. Not only do you need to keep your gold safe, but you usually have to pay a sales commission to sell it for cash. For those who don’t know, you don’t have to buy a tangible metal to invest in gold.

A better solution is to use a Contract for Difference (CFD) to buy gold. This allows you to be exposed to the price of gold without actually holding any gold. You can buy gold CFDs without commission through a UK CFD broker like eToro. You can also invest in ETFs such as the SPDR Gold Trust ETF (GLD), which is fully backed by physical gold.

Fixed Annuity

An annuity is a contract often entered into with an insurance company that pays a certain amount of income in exchange for an advance payment over some time. Annuities can be structured in a variety of ways, either for a fixed period, for example, 20 years, or until the customer dies.

In the case of a fixed annuity, the contract promises to pay a certain amount, usually each month, for a certain period. You can pay in a lump sum and pay immediately, or you can make payments over some time and pay your annuity later, such as

A fixed annuity can guarantee income and returns and can provide more financial security, especially when you are no longer working. Annuities can also allow you to increase your income with a tax deferral rate, and you can deposit an unlimited amount into your account. An annuity may also be linked to several other benefits, such as death benefits or guaranteed minimum payments, depending on the contract.

Dividend-Paying Stock

Stocks are very risky investments but one segment of stock i.e. dividend stock is not that risky as constant dividend reduces the risk. Dividends are considered safer than high-growth stocks because they pay out in cash. So dividend stocks fluctuate with the market, but may not fall that much when the market goes down.

Dividend stocks are considered less risky in comparison to other kinds of stocks. We wouldn’t say that dividend stocks are a low-risk investment because there were dividend stocks that lost 20-30% in 2008, but overall, the risk is less than the risk for growth stocks. This is because companies that pay dividends tend to be more stable and mature, offering both dividends and share price growth opportunities. Not only does it depend on the value of this stock, which can fluctuate, but you can also get a stable income from it.

Money Market Accounts

A money market account can feel like a savings account and offers many of the same benefits, including debit cards and interest payments. However, money market accounts may require a higher minimum deposit than savings accounts.

Interest on money market accounts may be higher than on similar savings accounts. Also, a money market account, like a savings account, can have a monthly withdrawal limit but gives you the flexibility to spend your money when you need it. This is where you need to find the optimal rate that will maximize your profits.

Money market accounts are protected by the FDIC with a guarantee of up to $250,000 per depositor per bank. Therefore, short-term money market accounts pose no risk to clients.

Top online trading platform the UK


eToro low-risk online trading platform

Whether it is a short-term or long-term investment or low risk or high risk, eToro is for you. FCA brokers have access to the best investments discussed on this page. With an international client base of now over 12 million investors in the UK and over 12 million investors, the platform is especially popular with beginners.

The end-to-end investment process can be completed in less than 10 minutes regardless of your experience level. All you need to do is sign up, deposit funds instantly using your UK debit/credit card or e-wallet, then select the facility you want to invest in.

The eToro platform features over 1,700 stocks (the UK and international) and numerous ETFs and cryptocurrencies. You can also trade CFDs in the form of stocks, indices, light metals, energies, and foreign exchange. No matter what you invest or trade, eToro does not charge any ongoing fees.


Plus500 online trading platform low-risk investment

If you are looking for low-risk trading moves, consider Plus500. There are thousands of financial products on this fee-free CFD platform. If you’re interested in stocks, indices, commodities, bonds, interest rates, or forex, Plus500 is for you.

The Plus500 can be accessed from a desktop computer or via the provider’s native mobile app. You can access this online platform via iOS and Android devices both. It doesn’t take much time to get started, you can easily use this online platform. Deposits can be made immediately by check/credit card and e-wallet. You need to find an account of at least £100 and there are no transaction fees.


capital.com trading platform low-risk investment

Capital.com is a popular CFD trading platform with thousands of markets. This includes CFDs on stocks, indices, forex, cryptocurrencies, and more. Again, this type of trading is suitable for short-term strategies and provides access to leverage and short-selling opportunities.

Capital.com is known for its easy-to-use business services that can be accessed via its main desktop website or iOS/Android app. The platform offers a complete trading package with no fees and no deposit or withdrawal fees. The platform accepts deposits from as low as £20. This can be facilitated via a debit/credit card or e-wallet.

How to invest in low-risk investment UK

To wrap up our guide, we now show you how to invest from the comfort of your own home. The step-by-step guide below shows you how to open an account with eToro, deposit funds instantly, and invest in assets without paying any fees.

eToro account for low-risk investment

Step 1: Open an investment account

Visit the eToro website and create an account. You will be asked to provide certain personal information such as your name, address, and date of birth. You must also provide your national insurance number and contact information. If you want to invest in your mobile device, you can download eToro (one of the UK’s best investment apps) for free from the smartphone app store.

Step 2: Upload your ID

eToro is an FCA regulated broker, it now asks you to verify your identity. You can do this in minutes by uploading a copy of the following:

  • A valid passport or driver’s license.
  • Recent bank statements or utility bills

Step 3: Deposit the funds

You will now be prompted to find an investment account. You can choose from the following payment methods, all for as little as $200. You can make the deposits via Credit card, electronic wallets such as PayPal, Skrill, or Neteller, wire transfer. A 0.5% currency exchange fee is charged on the deposit.

Step 4: Invest Now

Once the deposit is deposited into your eToro account, you can start investing. If you want to invest in the Amazon shares so put them in the search box and hit “Trade”.

Choose the best low-risk investment UK for you

Now that we have looked at the different types of investments that are popular in the UK, it is time to give you some guidance on how to choose the best investment for you and your financial goals.

Research- It is important to do a lot of research for the best investment. To acquire the skills to do DIY-based research, we recommend reading investment books or subscribing to investment podcasts. In addition, investment newsletters can help you keep up with current market trends.

Income or Growth- You must first evaluate how your chosen investment will pay off. For example, bonds allow you to make money on quarterly or semi-annual coupon payments, and growth stocks are good for capital gains. Then there are dividends and real estate that offer both.

Return- Find out what the expected return on your investment is. In some cases, such as bonds, peer-to-peer loans, or retail real estate, there is a clear picture of what needs to be recovered. However, it is unknown because stocks and their returns are both dependent on market forces.

Long or Short- Looking for a short or long-term investment? It is important to clarify this before opening a position.

Risk- You need to assess how much risk is associated with your chosen investment. Investing in US or UK government bonds at one end of the spectrum won’t bring you sleepless nights. However, cryptocurrency trading are likely to do so, as the asset class offers a very high risk-reward ratio.


As retirement approaches, it’s important to reduce your risk as much as possible. You don’t want to lose your capital late in the game. I want to save money because I have several years of retirement. The best low-risk investments can help. By earning a nominal interest rate on your money at low risk, your savings can help keep up with inflation without losing your shirt.

The best low-risk investments can help you increase your wealth over time while limiting your potential losses in case of a market downturn. One thing to be noted here is that low risk doesn’t mean low return either. Many low-risk investments provide comparable returns to high-risk investments, and diversified portfolios can be far more effective than individual investments for long-term investors.


What are the best low-risk investments in the UK?

There are so many investment opportunities. Everything depends on your investment goals. So, take the time to think about what you want to achieve and what your best assets are to achieve it.

How much should I invest online?

It depends on your broker choice. With eToro and Capital.com, you can start with a minimum deposit of $200.

Are online investments regulated in the UK?

Yes, online brokers are regulated by the Financial Conduct Authority (FCA).

Are corporate bonds considered low-risk investments?

Yes, corporate bonds are considered a low-risk investment.

Does investment in a saving account generate a return?

When you invest in a UK bank savings account, your money is protected by the Financial Services Compensation Scheme. This government program will reimburse you up to £85,000 if your bank closes without returning your money.