Where can I invest my money without risk?
The answer to this question is, unfortunately: there is not investment without risk.
In such a volatile world like this, under the influence of cyclical laws, not really “evolutionary”, it is impossible to be without risk.
The only thing for sure we know in this material reality is our death, an inescapable truth.
Therefore we must forget about investing without risk in this or that asset.
There will always be a risk.
And no, putting our money in bank deposits is not “investing with any risk”.
It is true that the probability of losing our money will be lower in that case, especially compared to other markets or assets like stocks.
It is very likely that companies go bankrupt.
On the other hand stock prices can rise 1000%.
Bank deposits rarely go in default mode, but they never give you great returns.
However, if we think that our country, for example, is about to enter a radical political Era, like many Third and Second World countries have done very often, then would be a bad idea to keep the money in the banks.
Let us see some examples of investments with risk.
- Investing in bank deposits. Supposedly with no risk. Normally, most banks in most of the countries of the developed World are quite stable. Some cases have occurred where the deposits have been under attack like that of Cyprus when the banking system was on verge of collapse. In the case of countries like Venezuela or the post war Europe, having the money in deposits was disastrous.
- Investing in cash. Supposedly an investment very safe. Unless a thief makes his way into our property and find the security box it is a very secure sort of investment. However, if we are in a difficult political situation, where there is big inflation, having our money in cash is quite risky. Just imagine Zimbabwe when the hyperinflation.
- Investing in gold or silver. Gold is always in demand by thieves and crooks: the main ones the government. If not, ask Roosevelt. Besides, gold and metals are quite volatile normally. We can have a 300% return in some years or a 50% loss. Mind you, the day the system collapses it will be the best investment of all.
- Investing in bonds. Inside Exter’s Pyramid, one of the best investments is that of bonds, only behind cash and gold, especially short term treasuries, since they are almost as cash. However, who was buying Venezuelan bonds in 2015? Well, paying 60% might be worth the risk. The fact that German and French bonds, for instance, have been secure the last 50 years does not mean they will or were secure the past or future 50.
- Investing in stocks. As we should know very well, these assets are quite volatile, with the possibility of facing bankruptcy any moment. This is why that the best way to do in this case is through diversification and buying a portfolio of them. Although it is not an option without risk it has proved to be one of the best investments in the Capitalistic Era. Although we never know when this Era might end.
- Investing in futures. People do not invest in futures. Forget about it.
- Investing in Forex. People neither invest in Forex. The most we could do id buying foreign currencies if we think our government is about to embark in confiscatory practices. Although it would be better simply to leave the country.
- Investing in Real Estate. This is not without risk, obviously. “House prices never fall” is something very common to hear among the masses. For instance, houses in countries where communism gained ground went to zero.
- Investing in diamonds and luxury objects. They tend to go up in price in advanced societies, but they never are without risk. In fact we will always have to deal with the typical burglars.
- Investing in formation. Well, this sounds well, but it is not absent of risk. Why? Because you may study some degree at university thinking about “money” and end up realizing some years later that the so called degree does not help you to find jobs in an inexistent market, which happens to be for many jobs. On the other what you learn by experience, that my friend is priceless.
Where to invest with no risk?
In the end, there is no such thing as investing without risk.
As it is logical, the return we can expect in the long run will be associated to the level of risk we are willing to assume.
For instance, in the long run it is demonstrated that the small companies have beaten the bigger ones in the race for returns, at least in the American markets.
These small sized companies give us better returns but also extreme times of volatility because when there is a bear market they fall more than the big stocks.
The same can be said of bonds.
When the maturity time is short we cannot expect very big volatility in it neither big returns, at least in normal conditions.
Therefore the best investment in terms of risk should be that one that gives us less prospects of good returns.
We cannot invest money without risk but we can invest it using our brain.
That is, at least, a good start.