Stocks are risky investments. This risk, as anyone who has traded stock knows, is not merely theoretical. In fact, it isn’t so much a risk that you might lose money as it is a guarantee that you will lose money at some point, and in some unspecified amount. There are times when this is OK, and times when it is not. Many investment writers—and I myself have certainly been guilty of this—tend to give the impression that for those who are extremely risk averse, the market has nothing to offer.
That, of course, is hooey.
For those who want total peace of mind, the market offers an array of choices, every one of which has a higher expected return than your mattress or your checking account. Better than any of your accounts, in fact, if the only account you know about is your checking account is at Wells Fargo (WFC). Before we begin, however, you may want to ask yourself what kind of safety you are seeking.
I’ll be explaining the different kinds of safety as we go forward. I’ll also provide contrarian offerings which, while not perfectly safe in themselves, are a great way to hedge against the possibility of a stock market decline. Of course we will also look at bonds, which have a guaranteed return, but which are subject to volatility due to interest rate fluctuations. And finally, we’ll go over some ETFs which lack even that much risk—funds which are absolutely guaranteed to increase in value, no matter what!
As always, remember to consider these ideas to be just that, ideas, and do your own research before making any investment decision.