This "Safe" Investment Could Actually Derail Your Retirement Plans

By Kailey Hagen, CFP – Apr 5, 2026 at 5:30AM ESTKey PointsInvestments like CDs feel safe because it's very difficult to lose money with them.However, their interest rates are far lower than what you'd likely get from investing over the long term.If short-term losses stress you out, check your portfolio less often.Nothing makes the bottom drop out of your stomach quite like checking your retirement accounts and seeing that all your stocks are down. You invested that money hoping it would grow your wealth over time, and now it feels like you're watching your hard-earned savings slip through your fingers. This feeling is so distressing that some people sell their shares and move their money to safer investments that don't carry the same risk of loss. But that might not give you the results you hoped for. Image source: Getty Images. "Safe" investments carry risks, too When people think of "safe" investments, they often think of things that can only make them money rather than things that carry a risk of loss. Certificates of deposit (CDs) are an example of what many see as a safe option. You put money into one of these accounts, and you agree not to touch it for a certain number of months or years. If you do as promised, the bank pays you a certain amount of interest each month. You can usually predict exactly how much you'll have in the CD at the end of its term upfront, and the only way to lose some of your initial deposit is to withdraw money from your CD quickly after opening the account. Then, you could face an early withdrawal penalty before you've earned any interest. This usually isn't an issue for most people, though. So it looks like it's a safe bet for those who want to make sure their retirement savings only grow. But CDs alone aren't likely to get you to your retirement savings goal. The average five-year CD rate is 1.34% as of March 2026. Even most high-yield CDs, which hit major highs during the pandemic, didn't rise much above 4%. Meanwhile, the stock market had a 10% average annual return over the last 50 years. That difference is huge. If you earned a 3% average annual return on your CDs over 20 years, an initial $10,000 deposit would eventually be worth $18,061. Had you invested that $10,000 instead and earned a 10% rate of return, you'd have $67,275 after 20 years. Investing is worth the risks One thing worth pointing out in our previous example is that the outcome doesn't depend on your investments steadily increasing in value by 10% each year. It only requires the average to be 10% over time. Your investments can do really poorly in one year and come roaring back the next, and you can still wind up doing well over the long run. That's why it's important not to get hung up on short-term losses, especially if you're a long way from retirement. If you sell your investments while they're down to prevent further losses, you're actually missing out on the gains you could have had if you'd allowed your assets time to recover. Rather than trying to find the safest investments, build a portfolio review strategy that doesn't require constant checkups. Check how your accounts are doing a couple of times per year at the most. And whenever possible, avoid making major decisions based solely on an investment's recent performance.Read NextApr 5, 2026 •By Keith SpeightsRetirees Could Get a Much Bigger Social Security Raise in 2027 -- Thanks to InflationApr 5, 2026 •By Trevor JennewineSpousal Social Security Benefits: 4 Things Retirees Need to Know in 2026Apr 5, 2026 •By Maurie BackmanA Roth IRA Sounds Great -- But Here's the Catch No One Talks AboutApr 5, 2026 •By Reuben Gregg BrewerAre You Really Ready to Start Collecting Social Security? 4 Signs it Might be the Perfect TimeApr 4, 2026 •By Maurie BackmanRetirees Are Rethinking This "Safe" Withdrawal Strategy. Should You?Apr 4, 2026 •By Maurie BackmanRetiring in a Volatile Market? Here's How to Protect Your Savings.About the AuthorKailey Hagen, CFP, is a contributing Motley Fool retirement analyst covering Social Security, Medicare, and retirement planning.

Before The Motley Fool, Kailey was a research analyst for Reviews.com focusing on credit and banking products. She is a Certified Financial Planner® and holds a bachelor’s degree in English from the University of Wisconsin-Madison.TMFKailey