What is a risk-free investment?

A riskfree investment is an investment that guarantees the return of the principal amount invested and a fixed rate of return without any risk of loss. In other words, there is no chance of losing money with a riskfree investment. Riskfree investments are typically offered by governments, financial institutions, and other entities that have a very high credit rating and a low chance of defaulting on their debt obligations. Examples of riskfree investments include government bonds, certificates of deposit (CDs), and savings accounts.