Dear Garden State Trust:
I’m looking for an investment that could double or triple my money in a year. However, it can’t be too risky, as I’ve had some financial setbacks this year. I have a lot of ground to make up, but I have to do it safely. What do you recommend?
—Mixed Signals
Dear Mixed:
I am sorry to have to tell you that there is no investment in which you can double your money in a short period of time without taking any risk. What you ask for sounds rather similar to the promises made by Charles Ponzi in the early 1920s. He offered a 50% profit in 45 days, or to double an investor’s money in 90 days. He had a great many takers, and the early investors did indeed reap those rewards. But there was no underlying investment at all, the early investors were paid with the money invested by the late arrivals—hence the derivation of the phrase “Ponzi scheme.” After a year this swindle collapsed, costing investors some $20 million.
There are some stocks that have had remarkable success. There are others that have gone to zero. There are simply no “sure things” in investing, and it is axiomatic that the greater the potential reward, the greater the risk. When it sounds too good to be true, it isn’t true.
Equities have been doing very well recently, and they have an outstanding record in the long run. I suggest that you consider a diversified portfolio and a much longer time horizon if you want to be a successful investor with a minimum of risk. Bat for base hits instead of home runs—it’s the more reliable road to success.
Do you have a question concerning wealth management or trusts? Send your inquiry to contact@gstrustco.com
(November 2021)
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