Before looking through hundreds of equity and fixed-income securities, it is important to ask a couple of fundamental questions, such as “why 4 percent?” and “is such a rate of return considered high or low?” The answer to these depends on the investor, more so than the issuer of the security. For example, an individual investor who is looking to grow their portfolio into millions of dollars will likely scoff at 4% and may even say that 4% a month is still fairly low. Conversely, an institutional investor with vast sums of capital to invest may see this as a decent opportunity to incrementally grow their holdings. Much of the discussion around single-digit returns depends on the perspective of the investor. 

Up until recently, the interest rates in the United States had remained at near-zero levels. Rising inflation prompted the Federal Reserve to tighten its monetary policy and incrementally raise interest rates to 4%. This action has diverted some of the capital away from riskier asset classes, such as stocks and cryptocurrencies, and into fixed-income securities issued by the United States Treasury. While inflation enters a downward trend, a 4% return on your portfolio is likely to become increasingly attractive as it is never too early to start preparing an action plan for when that happens. 

"A good financial plan is a road map that shows us exactly how the choices we make today will affect our future." - Alexa Von Tobel

When discussing guaranteed returns, the primary issuer to consider is the United States Treasury. Governments issue fixed-income securities to raise capital for various public spending projects. A stable and predictable stream of government securities allows the government, and investors alike, to operate in a stress-free investment environment. The investor is guaranteed whatever return the securities have and the treasury gets additional funds. 

The stability of treasury securities comes from the fact that they are backed by the national budget, which makes them nearly impossible to become insolvent. The Federal Reserve upping interest rates to 4% means that bonds issued by the United States Treasury have a coupon rate of 4%, which makes government bonds ultra-safe options for investors looking for a stable annual 4% return. 

"Both from the standpoint of stocks and bonds, an investor wants to go where the growth is." - Bill Gross

A key fact to consider when choosing government bonds is the duration of the bond, which may lead to some minor differences in bond yields. Bonds have a set maturity date that can range from a month to 30 years, which gives investors plenty of flexibility in choosing the duration of their investments. 

The yields of treasury bonds are directly tied to the official interest rate, which gives investors the opportunity to anticipate major interest rate shifts in the future. Treasury securities are often considered the safest investment product and with good reason - the only scenario when investors might not be able to receive coupon payments in time is if the government defaults on its obligations; which is not a likely outcome, even by the most pessimistic of forecasts.

As far as dependability is concerned, treasury bonds are the best option for investors looking to yield 4% (or more) on their investments. 

Municipal bonds are fixed-income securities issued by individual states and local governments. Such securities carry more risk than Federal bonds, as they vary by the location and economic prosperity of the state where they are issued. Municipal bonds issued by states with low unemployment rates and a well-diversified economy are more likely to have lower rates on their municipal bonds than states with less favorable data. 

Considering the fact that treasury bonds offer a 4% coupon rate, municipal bonds have higher yields, which makes them very attractive options for investors looking for a stable 4% return, as municipal bonds are still some of the most stable investments available on the market. 

The primary reason behind the different coupon rates between treasury and municipal bonds is the fact that municipal bonds can be issued by all 50 U.S. states, as well as individual counties in each state, which makes municipal bonds very different from each other in terms of risk and governance. The risk associated with a municipal bond requires a city or other community to go bankrupt, which is an extremely rare occurrence. This makes municipal bonds highly attractive for investors, as they get the opportunity to make an extremely safe investment while helping their local community as well. 

Treasury inflation-protected securities, or TIPS, are securities that are tied to the consumer price index (CPI) and move in line with inflation. The coupon rate of such securities depends on the current inflation level and rises or falls as inflation increases and decreases. Using such securities guarantees the buying power of investor funds in the long run, but does not offer much growth. Investors can resort to investing in TIPS when inflation is high and other investment options are limited or less attractive. However, the principal of the bond also increases or decreases during this period and investors can simply sell the bond before maturity and make a profit. TIPS are less concerned with profit margins and more so with hedging against inflation, which is the primary objective of these securities. 

The high inflation figures seen in 2022 have been a great example of how TIPS can shield investors from loss of buying power. When CPI rises, investors who bought bonds at a lower rate will lose the difference between the current CPI and their annual bond coupon, which is far from ideal. While TIPS may not be the go-to fixed-income securities, they can play an important part in delivering stable returns during uncertain market conditions. 

Most investors have heard of blue chip stocks before, which is a term used to describe stocks of large companies that occupy a sizable portion of their respective markets. These may be a part of the S&P 500 and likely pay dividends as well. Such companies benefit from a robust corporate structure and stable profitability, which is a great look for any prospective investor. However, stocks are not the only method of gaining exposure to blue-chip companies as these corporations regularly raise capital through debt financing, by issuing corporate bonds to the general public. 

While the majority of corporate bond investors are institutions, individuals can just as easily gain access to these bonds via their brokerage accounts. Corporate bonds may vary greatly in terms of risk, which is why it is recommended to review the financial statements of the issuing company, before risking your capital with them. The bond prospectus document typically includes the latest financial statements from the issuing company, as well as the governance model, key business units, customer base, as well as a detailed description of the bond.

In some cases, the coupon rate of corporate bonds may be twice as high as the treasury bond, which makes corporate bonds a great option for all types of investors, including those who are seeking a stable 4% annual return on their investment. 

Exchange-traded funds, or ETFs, are listed on stock exchanges and traded just like regular stocks. The key difference between ETFs and stocks is the fact that ETFs can be invested in a wide variety of different assets, including treasury and corporate fixed-income securities, such as bonds. Corporate bonds usually have higher coupon rates than treasury bonds, as they carry more fundamental risk than government-backed securities. This makes well-balanced bond ETFs great options for investors looking to secure a stable 4% return on their money. 

Investors can check the constituent bonds that make up the ETF and decide whether the underlying bonds carry an appropriate degree of risk and whether the investment will be able to fulfill their performance expectations. 

ETFs that have a bigger slant towards treasury securities might have lower yields, due to lower inherent risks associated with treasury securities, while some may invest in bonds of distressed companies, which can be significantly riskier. A well-balanced middle ground that consists of corporate bonds of blue chip companies, as well as long-term treasury securities, can be an easy fit to guarantee an annual 4% return. 

The S&P 500 is the benchmark index of the U.S. stock market, which includes 500 of the largest stocks tradable in the country. The index consists of companies from various industries, which are typically characterized by broad market capitalization, stable revenues and profit, and somewhat predictable performance in the long run. Multiple index funds track the S&P 500 by emulating the makeup of the index. Mutual funds and ETFs are constructed in a way that directly mimics the composition of the index, thus, leading to the same exact performance. 

Investors who choose an S&P 500 index fund, are essentially investing in the future of the American stock market, which returns just above 10% a year on average. While the returns of the S&P 500 are well in line with the 4% expected return, the annual returns may vary significantly. Therefore, investors seeking a 4% return with S&P 500 index funds should hold the investment over a longer period of time to achieve the same average annual return. 

Some of the most popular index funds that track the S&P 500 include:

• SPDR S&P 500 ETF Trust (NYSEMKT:SPY)
• iShares Core S&P 500 ETF (NYSEMKT:IVV)
• Vanguard S&P 500 ETF (NYSEMKT:VOO)

Index funds are long-term passive investments and investors seeking to shield their funds from inflation may find them to be an attractive option for this purpose. 

"..if there were a way to short 30-year bonds and and own the S&P for 30 years I would I would give you enormous odds that the S&P is going to be 30-year bonds now.." - Warren Buffett

Real estate investment trusts, or REITs, are funds that are invested in a variety of different types of real estate, which may include single-family homes, apartments, office spaces/buildings, warehouses, etc. The real estate is then either rented out or sold at a profit. The purpose of investing in a REIT is the high dividend payout, which is paid using the funds generated by the real estate portfolios. A typical REIT will pay 90% of its income as dividends, which leads to REITs having some of the highest dividend payout ratios on the stock market. While most REITs might not be able to offer a guaranteed 4% annual payout, there are some that offer even higher yields. However, all of this comes at the expense of risk as some REITs invest in areas that carry more risk than others, which leads to higher yields to attract investors. REITs may vary in many ways, including:

• Types of real estate REITs invest in (may only invest in one type or a diversified basket)
• The expenses associated with owning real estate
• Local real estate taxes and regulations that apply to the REIT’s holdings
• Dividend payout ratio 
• Geographic distribution of the investments

These are only some of the key points to look at when picking a REIT to invest in. While many may promise high returns, only a handful can provide a stable 4% annual yield to its shareholders. 

“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” - Andrew Carnegie

Aside from buying low and selling high, stocks are also solid options for providing stable cash flows to investors. Some stocks, such as many that make up the S&P 500, pay quarterly dividends to shareholders. This serves a dual purpose as it rewards long-term investors for their commitment to the company and also increases the annual yield for investors, as such mature companies are not characterized by massive annual growth. 

Some dividend stocks are also called “dividend aristocrats”, due to a long track record of consistent dividend payouts. Some notable dividend aristocrats include:

• Automated Data Processing (ADP) - 1.7% dividend yield, 47 years of annual dividend increases
• Air Products & Chemicals (APD) - 2.6% dividend yield, 40 years of annual dividend increases
• Target Corporation (TGT) - 2.6% dividend yield, 50 years of annual dividend increases
• SySco Corporation (SYY) - 2.3% dividend yield, 53 years of annual dividend increases
• Nucor Corporation (NUE) - 1.5% dividend yield, 49 years of annual dividend increases

These stocks are also characterized by stable growth in the long run, which, coupled with dividend payouts, can add up to an annualized 4% return. Diversifying across dividend-paying stocks can be a good way of reaching your yearly objectives while having the benefit of a stable dividend cash flow. 

“Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” - John D. Rockefeller

Certificates of deposit are fixed-income securities issued by banks that operate similarly to savings accounts. The annualized rate can provide the necessary cash flows to shield the funds from inflation. Most CDs have a set duration and withdrawing funds before maturity will result in a penalty. Yields on CDs can vary greatly from bank to bank, which is why it is important to check the terms with multiple banks to find the CDs with the best returns. 

With interest rates being at 4% and subsequent raises still on the horizon, most banks offer CDs that return close to 4%, or more. This is a great option for investors with a 4% return threshold, who can simply keep their funds in the bank and benefit from the added layer of security and regulations that insure a portion of their funds from unexpected losses. 

Some savings accounts may also offer better rates than CDs, which would make them redundant. While CDs may generally offer higher rates than most savings accounts, this does come at the cost of flexibility, as holders are penalized for withdrawing funds early. Nonetheless, for investors who want a stable annual yield that is backed by a major financial institution, CDs are a solid investment choice. 

Opening a savings account can be a great way of accumulating money over long periods of time. Whether saving for retirement or any other purpose, high-yield savings accounts are a great way to achieve your long-term financial goals. High-yield savings accounts are virtually risk-free, as they are offered by major financial institutions and are FDIC insured for up to $250,000, which provides a safety net for account holders. Savings account yields are correlated with the interest rates upheld by the Federal Reserve, which has risen to 4%. This has prompted banks to raise yields on savings accounts to the 4% territory as well. This is great news for investors seeking the same returns on their capital, as they do not need to take any unnecessary risk and can simply keep their funds at the bank. 

Yields between savings accounts can vary and it is important to check for alternatives in other banks as well. 

Other financial institutions, such as personal finance companies, also offer higher-than-average annual returns and often provide checking accounts for clients who have a debit card with them. 

• In the world of investments, there are no such things as guaranteed returns. All securities and ventures, no matter how well-regarded, carry some amount of risk. However, there are plenty of options for the risk-averse investor, which include assets that are characterized by low-risk and stable annual returns
• Treasury securities are some of the safest investments available on the market and are backed by the government, which makes them near-guaranteed. Government bonds offer a 4% annual rate of return and are accessible to investors of all backgrounds and profiles. Municipal bonds are another solid option - issued by local governments at higher rates
• ETFs and REITs are popular options for investors who wish to shield their funds from inflation and steadily grow their wealth over time
• Banking products, such as certificates of deposit and high-yield savings accounts can offer higher interest rates on savings, which can exceed the 4% annual yield figure, which is also the official Federal interest rate in the U.S. at the moment
• Dividend stocks and bonds issued by the same companies can also be a great mix, as larger corporations tend to be more stable and predictable in performance, thus, improving their risk profile