4 Smart Investments

Many clients ask what low-risk, tax-efficient investments make the most sense in today’s market — especially for high earners looking to grow or protect capital without excessive exposure. Below are seven smart, accessible investment options that offer a range of benefits from steady returns to tax advantages.

1. High-Yield Savings Accounts (HYS)

High-yield savings accounts (HYS) offer higher interest rates than standard savings accounts, sometimes even reaching 4–5%. For example, if you put $10,000 in an account offering 4%, you’d earn $400 in interest over a year. This is a solid option if you want low-risk growth for your cash while keeping it easily accessible. HYS accounts are a good choice for short-term savings, emergency funds, or parking money you don’t need right away. Online banks often offer the best rates and the FDIC insures accounts up to $250,000.

2. Certificates of Deposit (CDs)

A CD is a time deposit where you agree to lock your money for a set term in exchange for a higher interest rate, often ranging around 5%. For example, if you invest $10,000 in a six-month CD with a 4.5% interest rate, you’d earn $225 over the six month period. CDs are low-risk, but you can’t access the money without a penalty until the term ends which often ranges from 6 months to 6 years. They’re a good option if you’re looking for guaranteed returns with minimal risk and don’t need quick access to your funds.

3. U.S. Treasury Bonds

U.S. Treasury Bonds are some of the safest investments available, as they are backed by the U.S. government. When you invest in a Treasury bond, you’re essentially lending money to the government for a set term (such as 10 years), and in return, you earn interest. With semi-annual compounding, the interest is added to your investment every six months, so over time, you’ll earn interest on your interest, slightly increasing the total return. However, in the case of Treasury bonds, the interest is sometimes just paid to you rather than reinvested into the bond. Treasury bonds provide steady, reliable income, and because they are backed by the U.S. government, they are low-risk. However, the trade-off is that they usually offer lower returns than other investment options, like stocks or corporate bonds. They’re ideal for investors who prioritize preserving capital and want a stable, predictable income stream, rather than aiming for high returns. In States like New York and California, the interest earned is exempt from state taxation.

4. Municipal Bonds

Municipal bonds are issued by local governments and can be a great choice for tax-conscious investors. In New York City, for example, interest from NYC-issued municipal bonds is exempt from both federal and state taxes, which can be a significant advantage for high-income earners. This tax-free benefit allows you to keep more of the interest you earn, making municipal bonds especially appealing for individuals in higher tax brackets. For example, if you invest $10,000 in a 4% municipal bond, you’ll earn $400 in tax-free interest annually. If you are a high-income earner in New York City, this can be the equivalent of earning 8% interest, or $800, investing the same $10,000 elsewhere. Yes, a high-income earner in NYC can potentially save over 50% in taxes on municipal bond interest vs. interest from a savings account! Although most municipal bonds do not compound, they can be an excellent choice for long-term tax-efficient income, especially for those in high-income tax brackets, as they provide stable returns while maximizing the interest you keep in your pocket.

These strategies aren’t about chasing the highest return — they’re about protecting wealth, staying liquid where necessary, and reducing tax exposure. The right mix depends on your goals, risk tolerance, and timeline, but each of these can play a smart role in a well-rounded portfolio.