Article
Investment Risk Tiers
When looking at investment diversification, it is
important to look at the volatility of each product and have a mix that
meets your tolerance for risk. As a rule, the younger we are the more risk
we can tolerate, as we age we should shift towards products what have less
risk. This shift is recommended because we have less time to recover from
losses in our portfolio. The various types of investments can be grouped
into tiers that associate their volatility and risk.
Tier 1 (Ultra Safe) - Recommended that everyone
have a small portion. Products include FDIC Insured Checking and Savings
Accounts, Treasury Bills, Bonds, Life Insurance Based Products, U.S. Savings
Bonds, FDIC Insured Certificates of Deposits.
Tier 2 (Very Safe) - Products include High Grade
Municipal Bonds, Money Market Accounts, High Grade Corporate Bonds..
Tier 3 (Safe) - Products include Balanced Mutual
Funds, High Grade Preferred Stocks, High Grade Convertible Securities.
Tier 4 (Somewhat Safe) - Products include High
Grade Common Stocks, Growth Mutual Funds.
Tier 5 (Some Risk) - Products include Limited
Partnerships, Real Estate, Options.
Tier 6 (Moderate Risk) - Products include
Speculative Common Stocks and Bonds, Gold, Silver and Collectibles.
Tier 7 (Significant Risk) - Futures,
Commodities, Cryptocurrencies.
Tier 8 (Extreme Risk) - Recommended only for
those that can afford to lose the entire investment. Products include
Venture Capital.
Page Last Updated: 15 June 2025
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