When the market and the economy are challenging your sense of direction, it’s easy to look for the types of returns that were available to stock investors not many years ago.
The problem is that unknowns about the stock market and economy make it difficult to find good returns for your money.
When the economy is struggling, it is a common remedy for the Fed to lower interest rates.
Lower interest rates make it cheaper for consumers and companies to borrow the money needed for a new house or a new manufacturing plant.
While that’s a good thing, it makes earning a decent return on your money difficult. Bond rates, bank accounts and other savings options typically pay low interest when money is cheap to borrow.
There are always better potential returns in any market, but you must be willing to take more risk.
Taking more risk with your investments in an uncertain economy is, well, risky.
Unfortunately, there are always those willing to tempt investors with promises or implied promises of high returns a low risk.
You would do well to avoid high return temptation, because you can bet the people tempting you have under-stated the risk.
Whether the stock market is hot or cold and whether the economy is booming or in the middle of a bust, one thing remains constant:
There are no high returns (returns above the current normal rate) with low risk.
Any promises to the contrary are pure marketing hype, borderline unethical and possibly illegal.
