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A Perfect, Risk-Free Investment? Run!

March 7, 2014
By Michelle Perry Higgins

What’s the No. 1 sign that an investment is riskier than it sounds?

When the promotion for the investment does not provide a fair and balanced analysis of the risk versus reward, my advice is to run the other way.

If they’re only talking about the upside and not about the risk, to me, that is a sign that something may be amiss. There is no such thing as a perfect investment that is risk free. Every investment will carry some sort of risk, from liquidity, market, credit, inflation, interest or even tax. The key is having a strict due diligence screening process before putting any of your hard-earned cash to work. After last year’s extraordinary U.S. equity returns, I would be wary of any marketing ads that only promote short-term results. Don’t be fooled.