The best investment without risk

Risics cannot be categorically ruled out. In life, there are always risks; in fact, all of life consists of risk.

Thus, the risk-averse investor has always sought investments that were guaranteed by a bank or insurance company or even, at best, by the government. During the financial crisis of 2007/2008, all security-oriented investors became aware that even such guarantees can only be worth what the guarantor’s credit rating allows. At that time, the US bank Lehman Brothers collapsed. All certificates guaranteed by Lehmann were worthless in one fell swoop. Subsequently, Hypo Real Estate Bank, Commerzbank and even the Swiss banking giant UBS stumbled. Ultimately, all these banks were rescued by their respective governments and thus by taxpayers. So the very last resort intervened to save the savings of millions of citizens. In doing so, they believed they had invested without risk.

So we have to move away a bit from the original idea of the best investment without risk. Perhaps towards an attractive investment with manageable risk. What, then, is an attractive investment? A financial investment becomes attractive when it generates more return than the usual capital market interest rate. Since the capital market interest rate in the euro zone is currently 0%, any investment that generates a return of 2% or 3% is already attractive. But neither government bonds nor debt securities nor mortgage bonds achieve this yield. Even the bonds of large, highly rated companies do not yield 3%. So the focus should be on medium-sized or smaller companies. Or on companies that operate in niches. Such companies have to issue bonds with interest coupons of 4%, 5% or 6% to convince creditors on the capital market. These are then attractive returns.