Is there a such thing as a "risk free" investment that still carries a decent return (not a savings account)?
Answers
292 points
Intern answered one year ago …
Hmmm...T-bills, T-Bonds, etc....any kind of treasury is essentially risk free as it's backed by the "full faith and credit" of the US government...but the return here isn't stellar.
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3966 points
EthanR answered one year ago …
How about an investment in yourself? Take a course that can further your career. Start a small business on the side on a shoe string. Start a healthier diet or exercise program? I know this wasn't the type of answer that you were seeking, but it seems to me that an investment in oneself might be the only risk free investment with a decent return.
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2709 points
Oldman answered one year ago …
EthanR's answer is not only excellent, but if you invest some time and effort to paper-trade, then you'll know the risks much better than by percentages. I think his answer is a' propos every beginner!
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alanj answered one year ago …
It depends on what you mean by decent. If you mean something like 10% annual return and risk free, it's not going to happen in the current financial market conditions. That's because risk and reward go hand n hand. The reward/return goes up as the risk goes up. If you mean decent in comparison to other risk free investments then I-Bonds would be a consideration. I-Bonds are inflation adjusted. If you had bought some just prior to May 01 of this year when the next interest rate adjustment occurs (Nov) it will be earning slightly more than 6% annual return. I don't recall what it is right now, but I'm sure it is less than 6%. One draw back is that you are limited to investing only $5000 a year right now. To avoid the limitation you can invest through a fund such as the ETF (TIP). But the price of the fund can change. The history shows a slight price change. Which means slightly more risk, but not much. The way bonds work is when the price goes down the yield goes up. And when the price goes up the yield goes down. I did a search on gov fixed income ETF's several weeks ago and the 5 yr annual return was slightly more than 6%. And I believe that ETF was (TIP). Short term it was between 13 and 14%. I don't recall if that was 1 yr or the beginning of the yr. Most likely the beginning of the year.
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699 points
7million7years answered one year ago …
I like EtanR's answer ... it's EXACTLY what Warren Buffett would say (hey ... did say!), and I totally agree.
If you do want to talk investments and risks, you can't do that without discussing timeframe ... what's yours?
For example: the Dow Jones returned no less than 8% over ANY 30 year period that you would care to name ...
.... 4% over ANY 20 year period that you would care to name ...
.... ZERO, that's right, zero, over ANY 10 year period that you would care to name.
From safe to volatile ... depending on whether you choose to invest anywhere up to 10, 20, or 30 years!
Of course, some investments are volatile no matter what the period ... and, others are 'safe' but the returns are inherently inverse.
102 points
sunnyD answered one year ago …
Take a look at Segregated funds. You can choose to receive back 75 or 100% of your capital in ten years guaranteed.
Then you can invest in higher risk growth investments but maintain a stop loss on your hard earned initial investment. You can also reset if your investment really performs. That way you set a new higher floor and can save the gains you've made.
D.
102 points
tacowen answered one year ago …
Nothing in life is really "risk free". Even guaranteed returns in a CD are subject to inflation risk...and even business risk, should the bank fail. But of course, that is unlikely in a short term and therefore risk can be measured, weighted and possibly even controlled.
"decent return" is relative to whomever is determining it's meaning.
411 points
jester112358 answered one year ago …
No risk, no reward. In short as PLBerns said succinctly: no.
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Mona answered one year ago …
Market Growth GICs (in Canada) provide higher earning potential with returns tied to stock market indices and principal is guaranteed. For example GIC tied to utilities index.
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