With the stock market being so unpredictable, many people are left wondering if there is such a thing as a “safe” investment – one that they can count on to produce positive returns. While it’s impossible to guarantee success when it comes to investing, understanding the various kinds of assets and what risks you’re taking can help you diversify your portfolio in ways that may lower risk and increase the potential for growth. In this blog post, William Schantz discusses what differentiates safe investments from higher-risk ones and explores some strategies for growing wealth without putting everything at stake.
Is There Such A Thing As A “Safe” Investment? William Schantz Answers
According to William Schantz, when it comes to investing, the phrase “safe investment” is often used to describe certain types of investments that are believed to carry less risk than others. While it is true that some investments may be safer than others, there is no such thing as a completely “safe” investment. Every type of investment carries some level of risk.
To understand why there isn’t any such thing as a guaranteed safe investment, let’s look at an example. Bonds, as per William Schantz, are considered one of the safest forms of investing since they are backed by government entities or corporations with strong credit ratings; however, even bonds can yield losses in the event of default or if interest rates rise unexpectedly. The same holds true for stocks, which have been known to decline significantly in value during market downturns.
Data shows that the average rate of return on safe investments, such as certificates of deposit (CDs) and treasury bonds, is typically lower than the returns earned on riskier investments, such as stocks or real estate. In fact, over the past 10 years, data indicates that CDs have returned an annualized 0.77%, while stocks have returned a compounded 7.86%. Despite this higher rate of return, stock investing also carries more risk and can cause investors to lose money if certain conditions are not met.
Real-life example: A good example of why there isn’t any such thing as a “safe” investment can be seen through what happened with Enron back in 2001. Enron was one of the largest and most successful companies in America at the time, and its stock was often considered a safe investment. Unfortunately, investors who put their money into Enron as a guaranteed safe investment ended up losing all their money when it went bankrupt due to accounting fraud and mismanagement.
William Schantz’s Concluding Thoughts
The takeaway here is that no matter what kind of investment you make—whether it’s stocks, bonds, or even cash—you should always be aware of the risks involved before making any decisions. According to William Schantz, by understanding the level of risk associated with different types of investments, you can make an educated decision about which ones are best for your particular situation. Ultimately, there is no such thing as a “safe” investment; however, it is possible to make an informed investment decision that fits your goals and level of risk tolerance.