What are the benefits and drawbacks of risk-free investments?

Benefits of riskfree investments:
Capital preservation: Riskfree investments offer a guarantee of principal, meaning your initial investment amount is safe and will not decrease in value.
Predictability: The returns on riskfree investments are generally predictable and stable, making it easier to plan for future expenses.
Low risk: Since these investments are considered to be riskfree, they are less likely to experience fluctuations in value due to market volatility.

Drawbacks of riskfree investments:
Low returns: Riskfree investments typically offer low returns compared to other types of investments, such as stocks or real estate, which means the potential for growth is limited.
Inflation risk: Riskfree investments may not offer returns that keep up with inflation, meaning the value of your investment may actually decrease over time.
Opportunity cost: Investing in riskfree investments may mean missing out on potentially higher returns offered by other investments, which may be suitable for investors willing to take on more risk.

It's important to note that riskfree investments are not suitable for everyone and should be evaluated based on individual financial goals, time horizon, and risk tolerance.