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What is the Perfect Investment/Financial Product? February 10, 2010

Posted by shaferfinancial in Finance, Uncategorized.
Tags: ,

In the quest for the Holy Grail of financial products, many, perhaps most, in the business of giving financial advice end up picking one particular strategy/product as THE ONE!  This almost always ends up badly for their clients because the adviser becomes emotionally invested in that product/strategy.  The way our brain works is not to coolly, rationally, objectively absorb new information, but to filter it through our emotions.

When you take the emotion out of it here are the consensus strategies from best historic internal rate of returns to worst:

Real Estate [Investment]

Individual Stocks


EIULs [only a fifteen year history available]

Mutual Funds


Money Market

Now here is the kicker.  The higher rates of return strategies require active involvement of the investor.  That of course should be obvious, can you really expect to do anything well without working at it?  And I will add on the Shafer corollary,  If everyone else is doing what you are doing, or they are running seminars all over the place telling you it is easy to make money doing XXXX, then you are barking up the wrong tree!  Investing for high returns takes work, patience and experience.

Now it is OK if you don’t want to put the hard work in.  But you should run from anyone that says that the best way to invest in XXXXX and you can do it passively!  Check out your current investing strategy and ask yourself is this what you were told?

So if you want to be a passive investor then search for a product that gives you passive investment returns, does not require you to make changes periodically, and can solve your needs today and tomorrow.

But if you want to get decent returns, then you need to make the decision to become an active investor.  It’s that simple.



1. Thomas Adair - February 11, 2010

If your interested i developed several arbitrages that produce over 30% a year without risk.

Thomas Adair

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