Quora Answer: What are the Best Low-Risk Stocks?

The following is my answer to a Quora question: “What are the best low-risk stocks?”

There are stocks that are riskier than others, and those that are less risky.  All that is contextual, and it is almost impossible to quantify which is the least risky.  In general, however, blue chip stocks are the least risky.  These are a category of stocks considered reliable, and least likely to crash.  That does not mean, of course, that without risk. Enron Corporation and Lehman Brothers were considered blue chips.

In terms of securities, in general, then gilt-edged sovereign bonds are the least risky.  This includes US Treasury Bonds.  The problem is that the yield is extremely low, often below inflation.  The best compromise is to not invest in individual stock, but a fund.  This allows you to diversify your risk, at a lower cost than actually taking individual positions across debt and equity instruments, across different industries and sectors.  This is how you actually lower your risk: diversification.