{"id":7044,"date":"2024-10-04T17:30:57","date_gmt":"2024-10-04T15:30:57","guid":{"rendered":"https:\/\/moneyhub.ee\/?p=7044"},"modified":"2025-04-22T13:45:09","modified_gmt":"2025-04-22T11:45:09","slug":"low-risk-high-return","status":"publish","type":"post","link":"https:\/\/moneyhub.ee\/en\/useful\/articles\/low-risk-high-return\/","title":{"rendered":"Are low-risk, high-return investments a myth?"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"7044\" class=\"elementor elementor-7044\" data-elementor-post-type=\"post\">\n\t\t\t\t<div class=\"elementor-element elementor-element-1bc34bad e-flex e-con-boxed e-con e-parent\" data-id=\"1bc34bad\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-6e38c664 elementor-widget elementor-widget-shortcode\" data-id=\"6e38c664\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"shortcode.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-shortcode\"><nav aria-label=\"breadcrumbs\" class=\"rank-math-breadcrumb\"><p><\/p><\/nav><\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-280cf218 e-flex e-con-boxed e-con e-parent\" data-id=\"280cf218\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t<div class=\"elementor-element elementor-element-3092632b ddddf e-flex e-con-boxed e-con e-child\" data-id=\"3092632b\" data-element_type=\"container\" data-e-type=\"container\" data-settings=\"{&quot;background_background&quot;:&quot;classic&quot;}\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-135625ea elementor-widget elementor-widget-heading\" data-id=\"135625ea\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Are low-risk, high-return investments a myth?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-10ac202b e-flex e-con-boxed e-con e-parent\" data-id=\"10ac202b\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-635149ea elementor-widget elementor-widget-image\" data-id=\"635149ea\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img fetchpriority=\"high\" decoding=\"async\" width=\"2240\" height=\"1260\" src=\"https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3.png\" class=\"attachment-full size-full wp-image-7046\" alt=\"Are low-risk, high-return investments a myth?\" srcset=\"https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3.png 2240w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3-300x169.png 300w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3-1024x576.png 1024w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3-768x432.png 768w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3-1536x864.png 1536w, https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3-2048x1152.png 2048w\" sizes=\"(max-width: 2240px) 100vw, 2240px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-1ac957 e-flex e-con-boxed e-con e-parent\" data-id=\"1ac957\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-4893243a elementor-widget elementor-widget-heading\" data-id=\"4893243a\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Investing at its very core is simple. It's all about risk and returns. But is there a thing as a low-risk, high-return investment? MoneyHub discusses.<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-53b00648 elementor-widget elementor-widget-text-editor\" data-id=\"53b00648\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><b>Post summary:<\/b><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Assessing risk in investing<\/b><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>4 types of low-risk, high-return investments<\/b><\/li><\/ul><h2><span style=\"font-weight: 400;\">Assessing risk in investing<\/span><\/h2><p><span style=\"font-weight: 400;\">Investing, at its very core, is simple. It&#8217;s all about risk and returns. How much incremental euro are you willing to risk to gain a euro?<\/span><\/p><p><a href=\"https:\/\/www.investopedia.com\/financial-edge\/0210\/rules-that-warren-buffett-lives-by.aspx\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Warren Buffett simplifies this with this advice on investing:<\/span><\/a><\/p><ol><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Rule 1: Don&#8217;t lose money<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Rule 2. Don&#8217;t forget rule number 1<\/span><\/li><\/ol><p><span style=\"font-weight: 400;\">Risk is thus defined by how different the returns are, not losing money.<\/span><\/p><p><span style=\"font-weight: 400;\">To further explain, risk is the uncertainty of a loss; you could lose your capital on an <a href=\"https:\/\/moneyhub.ee\/investments\/fx-brokers\/\">investment<\/a>.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Stocks and shares are riskier than government bonds, but they typically accumulate higher returns in the long term. The amount of risk associated with stocks and shares varies greatly.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Stocks are riskier when their valuations are high.<\/span><\/p><p><span style=\"font-weight: 400;\">Stock markets have convinced us that to minimise risk, we should invest our money in well-managed hedge funds.<\/span><\/p><p><span style=\"font-weight: 400;\">Naturally, these funds require investors to pay fees to manage them. Thus profits, whilst generally higher, will only be made once fees have been paid.<\/span><\/p><p><span style=\"font-weight: 400;\">This is simply a measure the stock market invented to sell you more managed hedge funds.<\/span><\/p><p><span style=\"font-weight: 400;\">When assessing risk, short-term and long-term considerations come into play. In the short term, breaking even is an end goal.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">However, most investors strive for the long term and should consider two critical factors: inflation and <a href=\"https:\/\/moneyhub.ee\/money\/credit-cards\/\">liabilities<\/a>.<\/span><\/p><p><span style=\"font-weight: 400;\">Inflationary effects are minimal in the short term. Still, it does matter in the long run because losses from inflation will compound over time.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Turning to liabilities that grow over the long term, funds like pension plans, <a href=\"https:\/\/moneyhub.ee\/insurance\/life-insurance\/\">life assurances<\/a> and endowments have liabilities they need to fund. Individuals are impacted by the obligation to meet retirement goals and family responsibilities.<\/span><\/p><p><span style=\"font-weight: 400;\">The risk, therefore, represents the uncertainty of a shortfall in achieving the projected liability &#8211; the end goal.<\/span><\/p><p><span style=\"font-weight: 400;\">Rather than recovering their investment, investors should assess the probability of achieving the required rate of return &#8211; <\/span><i><span style=\"font-weight: 400;\">their <\/span><\/i><span style=\"font-weight: 400;\">end goal.<\/span><\/p><p><span style=\"font-weight: 400;\">Essentially, what amounts to low risk is different to one investor than another. The difference is not surrounding what constitutes high returns but the end goal for the principal investment.<\/span><\/p><h2><span style=\"font-weight: 400;\">Four examples of low-risk, high-return investments<\/span><\/h2><h3><span style=\"font-weight: 400;\">1. P2P loans<\/span><\/h3><p><span style=\"font-weight: 400;\">P2P investing has become one of the fastest-growing alternative investment vehicles, providing investors with diversified portfolios and delivering high returns.<\/span><\/p><p><span style=\"font-weight: 400;\">With most platforms providing various capital protections, including buyback guarantees, guarantee funds, and a voluntary reserve, the risk to investor funds has been minimised.<\/span><\/p><p><span style=\"font-weight: 400;\">Coupled with the steady income returns, P2P loans make for a sturdy investment for those seeking lower risk to their capital.<\/span><\/p><p><span style=\"font-weight: 400;\">Typical P2P loan rates of return can range <\/span><a href=\"https:\/\/moneycheck.com\/monestro-review\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">between 6% and 20%<\/span><\/a><span style=\"font-weight: 400;\">, even after accounting for management fees.\u00a0<\/span><\/p><h3><span style=\"font-weight: 400;\">2. Property<\/span><\/h3><p><span style=\"font-weight: 400;\">Property investments can leverage high returns through rental income, appreciation, and profits generated by business activities that depend on the property.<\/span><\/p><p><span style=\"font-weight: 400;\">Other returns are through tax advantages and lump sum returns should investors sell the property concerned.<\/span><\/p><p><span style=\"font-weight: 400;\">Property investment trusts offer an alternative way to invest in property without owning, operating, or financing properties, thus removing the hassle of property management.<\/span><\/p><p><span style=\"font-weight: 400;\">Residential rental properties, for instance, have an average return of 10.6%. On the other hand, commercial property has an average <\/span><a href=\"https:\/\/www.mashvisor.com\/blog\/real-estate-return-on-investment-average\/#:~:text=According%20to%20the%20Index%2C%20the,return%20on%20investment%20of%209.5%25.\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">return on investment of 9.5%.<\/span><\/a><\/p><h3><span style=\"font-weight: 400;\">3. Timber<\/span><\/h3><p><span style=\"font-weight: 400;\">Timber has been a favourite alternative investment of investors for over a decade. The best part about timber is that you don&#8217;t do anything. Every year the tree grows, you make 2-4%, assuming constant timber prices.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">The best part is that you don&#8217;t have to sell when timber wood matures for harvesting. Investors can hold their timber investments until they are happy with the current prices at which to sell. Typically, timber prices correlate with the housing market.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">However, they are unrelated to the stock and bond markets, providing relief should a stock market slump and offering <\/span><a href=\"https:\/\/www.bedelfinancial.com\/timber-investing-a-valid-long-term-growth-strategy\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">returns around 7%.<\/span><\/a><\/p><h3><span style=\"font-weight: 400;\">4. Rare coins and precious metals<\/span><\/h3><p><span style=\"font-weight: 400;\">Similar to timber, buying precious metals like gold, silver, or rare coins. Rare coins and precious metals are not as closely related to the global economy&#8217;s performance as the stock market is.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Precious metals and rare coin prices are often closely tied to the price per ounce of gold and silver rather than any other index.<\/span><\/p><p><span style=\"font-weight: 400;\">Because of this, rare bullion coins are generally considered one of the <\/span><a href=\"https:\/\/www.consumer.ftc.gov\/articles\/0135-investing-bullion-and-bullion-coins\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">less risky investments on the market.<\/span><\/a><span style=\"font-weight: 400;\"> Precious metals prices range on an average yearly return of 3-4%. Sometimes, prices <\/span><a href=\"https:\/\/www.unboundinvestor.com\/return-potential-for-precious-metals\/#:~:text=My%20analysis%20of%20precious%20metals,high%20as%2015%2D20%25.\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">hit decade highs of 15-20%.\u00a0<\/span><\/a><\/p><h2><span style=\"font-weight: 400;\">Final thoughts<\/span><\/h2><p><span style=\"font-weight: 400;\">Alternative investments are much less risky than investing in stocks, shares, bonds, and mutual funds.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Additionally, the returns they make are usually more significant.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Investors have more control over alternative investments, which provides a higher safety net because of this control.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">In summary, don&#8217;t let the stock market define risk for you.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Taking on more risk does not necessarily equate to higher returns. The causality could be the opposite; investors demand higher returns for shouldering more significant risk.<\/span><\/p><p><span style=\"font-weight: 400;\">Low-risk, high-return investments aren&#8217;t a myth \u2013 they merely require assessing an investor&#8217;s end goals.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Investing at its very core is simple. It&#8217;s all about risk and returns. But is there a thing as a low-risk, high-return investment? MoneyHub discusses.<\/p>\n","protected":false},"author":3,"featured_media":7046,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-7044","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles"],"acf":[],"blog_post_layout_featured_media_urls":{"thumbnail":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3-150x150.png",150,150,true],"full":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3.png",2240,1260,false]},"categories_names":{"21":{"name":"Articles","link":"https:\/\/moneyhub.ee\/en\/category\/useful\/articles\/"}},"tags_names":[],"comments_number":"1","rttpg_featured_image_url":{"full":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3.png",2240,1260,false],"landscape":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3.png",2240,1260,false],"portraits":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3.png",2240,1260,false],"thumbnail":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3-150x150.png",150,150,true],"medium":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3-300x169.png",300,169,true],"large":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3-1024x576.png",800,450,true],"1536x1536":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3-1536x864.png",1536,864,true],"2048x2048":["https:\/\/moneyhub.ee\/wp-content\/uploads\/2024\/02\/MoneyHub-Special-Reports-Images-3-2048x1152.png",2048,1152,true]},"rttpg_author":{"display_name":"David Bailey","author_link":"https:\/\/moneyhub.ee\/en\/author\/davidbailey\/"},"rttpg_comment":1,"rttpg_category":"<a href=\"https:\/\/moneyhub.ee\/en\/category\/useful\/articles\/\" rel=\"category tag\">Articles<\/a>","rttpg_excerpt":"Investing at its very core is simple. It's all about risk and returns. But is there a thing as a low-risk, high-return investment? MoneyHub discusses.","_links":{"self":[{"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/posts\/7044","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/comments?post=7044"}],"version-history":[{"count":0,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/posts\/7044\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/media\/7046"}],"wp:attachment":[{"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/media?parent=7044"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/categories?post=7044"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/moneyhub.ee\/en\/wp-json\/wp\/v2\/tags?post=7044"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}