Which financial instrument is primarily used to accumulate wealth over time with low risk?

Bonds are primarily used to accumulate wealth over time with a relatively low level of risk due to several factors. First, they are debt securities issued by governments or corporations, which means they provide investors with regular interest payments over the life of the bond, as well as the return of the principal amount upon maturity. This predictable income stream makes bonds a more stable investment compared to equities or commodities, which can have volatile price fluctuations.

Furthermore, bonds are often viewed as less risky than stocks, particularly government bonds, because they typically offer lower but more consistent returns. Investors are usually willing to accept these lower returns for the added stability and predictable income, especially in uncertain economic environments.

In addition, bonds can be diversified across different issuers or types, which can further reduce risk. Factors such as credit ratings and market interest rates influence bond prices, but generally, they are seen as a safe haven during market instability, focusing on preserving capital while providing moderate growth over time.