What Are the Safest Investments in 2026? Experts Weigh In
Written by
Dawn Allcot
Edited by
Brendan McGinley
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The Federal Reserve has already started cutting its rates in 2025, and it’s likely that will continue, to the average American’s benefit — at least for now. Typically, falling interest rates lead to greater borrowing power, which is good for businesses. This often leads to good news for stock market investors, as stocks tend to rise at the outset.
With so many economic factors converging as we head into 2026, investors with low risk-tolerance may be seeking stability. Here’s how experts say 2026 is likely to shake out at present, and which economic sectors are likely to provide safety with enough growth to hedge against inflation.
Stock Market
Among other factors, tariffs, concerns over increased inflation in light of interest rate drops and the government shutdown add multiple levels of volatility to the stock market.
The volatility index (VIX) hit 22.44 on Friday, October 10, 2025, closing at 21.66. It’s been hovering roughly between 15 and 17 points since June, in a prolonged period of activity and intensity. However, this may not be cause for concern.
“The VIX is not necessarily a fear gauge,” said Yahoo Finance markets and data editor Jared Blikre in a video. “It’s a measure of institutional hedging activity. So they big guys are a little bit scared, but they’re not too scared.”
The takeaway: timing the market is still a bad idea, and the pros aren’t pulling out. Neither should you.
Health Care
Mark Kravietz, founder and managing partner of ALINE Wealth, points to health care as a market poised for further growth. “It’s a sector that has underperformed the market this year and the valuations of the companies are very fair,” he said. “We still have an aging population and ongoing health needs that make this sector recession-resistant.”
A recent article on SeekingAlpha.com noted that AI-powered healthcare platforms are poised to do exceptionally well, with the market predicted to reach $504 billion by 2032.
Companies like Zepp Health Corporation, OptimizeRX Corporation and Veeva Systems were rated as “strong buys,” according to SeekingAlpha.
Retail
While the consumer discretionary and luxury goods sectors may suffer, the retail sector in general could show stability.
Apparel and retail stocks showed returns of 27.3% and 25.8%, respectively, in prior falling interest rate environments, noted Robert R. Johnson, PhD, CFA, CAIA, professor of finance at Heider College of Business, Creighton University.
“Defensive firms are firms whose performance is largely independent of the business cycle,” he said, while citing food and beverages and household and personal care products as two “noncyclical” categories.
“People [still] need to eat [and] brush their teeth whether the economy is strong or weak and whether or not inflation is rising or subsiding,” he said.
However, look for spending patterns to change in a weak or inflationary economy, which means not all retail stocks will perform equally well.
“[Consumers] may shift from steak to hamburger or from shopping at Nordstrom to shopping at Costco,” Johnson said. “Consequently, not all firms that produce or sell nondiscretionary products would be considered defensive to the same extent.”
Kravietz agreed: “Consumer discretionary is vulnerable as consumers could scale back spending on non-essential goods and services as prices rise.”
Real Estate
Reduced interest rates could spark real estate lending, making REITs (real estate investment trusts) a relatively safe place to park your money. “For nearly five decades, US REITs have delivered stronger returns than broad US stocks in the 12 months following Federal Reserve easing cycles,” according to a post at Invesco.com.
“Real estate can provide stable income, protection against inflation through increased rents and can be resilient in uncertain economic environments,” Kravietz said.
Many experts expect the Fed to continue cutting the fed funds rate at the next two Federal Open Market Committee Meetings. “This should help the valuation of the underlying real estate while the income also becomes more attractive,” he said.
“Falling interest rates have been a tailwind for investors in the past and the Fed recently cut the fed funds rate for the first time since December of 2024,” said Johnson. While the impetus for rate cuts isn’t implicitly a good thing, the market opportunities that follow do tend to be, particularly mortgages.
A Few Surprises
As important as it is to look ahead, it’s equally important to note that anything can happen before the new year, and there is no crystal ball. Even the likelihoods above could turn out completely different from anticipated.
As a reminder, Johnson quoted Warren Buffett in his famous 1992 letter to Berkshire Hathaway shareholders: “We’ve long felt that the only value of stock forecasters is to make fortune tellers look good.”
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