Are any investments risk-free?

The short and only answer to this question is:

The somewhat longer answer is: While there are always risks, you can still potentially get around most of them by making sensible choices. Each possible option will have different trade-offs with risk and return. You need to do your own research, and decide what is the best way for you to invest your money. (And consult a professional qualified to give investment and financial advice!)

Low-Risk Options (Low Returns)

Even if you are extremely risk-averse and tempted by some options that are considered ‘low-risk’ that have very low returns, like savings accounts; these do not actually even cover the rate of inflation so you are effectively losing money if you decide to invest in these. Meaning, using low-interest saving accounts is as good as doing nothing in most cases! (Some current accounts actually have higher interest rates than actual savings accounts do, check with your bank!)

You effectively need to consider the risks of investing, but also the risks of not doing anything with your money, and inevitably missing out on any gains your capital could be doing for you.

Medium-Risk Options (Conservative Returns or Losses)

More sensible option could be to do invest in something that could be considered as a fairly conservative choice, like the S&P 500 fund – or any other diversified and fairly stable and trustworthy fund. It has at least historically proven to not only provide decent returns, but also either beat the effects, of protect against some of the effects of the inflation during the decades the inflation rates has been extremely high.

Exchange-Traded-Funds (ETFs) like the S&P500 can be also a great tool to diversify your investment portfolio as well. But do consider other funds in other parts of the world, and in other industries to diversify even further.

Using funds also takes away the manual labour of trying to identify good buying opportunities in individual stocks, and you can just focus on selecting a suitable fund on the overall characteristics, historical performance, and the risk of the a given fund.

Higher-Risk Options (High Potential Returns or Losses)

If you are in the position where you are asking yourself the question if any investment is risk-free: Please stay well clear of any trading and especially leveraging of stocks and assets – where risks can be multiplied!

Although choosing individual stocks can be very rewarding, it is also very risky. Even if you were to choose 10 or 50 stocks, you might still not be diversified enough based on your choices if some or most of your investments were to reduce in value. So, if you are looking to invest into a few companies you like, make sure you don’t hold a big position in a single stock but rather several – and diversify your portfolio even further by using ETFs, REITs, top-rated bonds etc.

‘The Best Thing’ (Probably) – A combination of all above

The best thing to do is probably a combination of the above to maximise the returns for your investments. E.g. Keep a cash reserve (for a rainy day, or just to be able to average down on a share that has momentarily reduced in value but still has a bright future), invest in stocks, invest in funds, and stay away from day trading and using anything that is leveraged, until more comfortable with your abilities etc.

As with any content on this website, this is not investment or financial advice. Rather, general guidance to help you get started. Always consult a professional before investing any of your hard-earned money!