With investments and their return, it is simple: if you want to aim for a higher return, you will have to take a greater risk of losing the investment (or that the value of the investment will decrease). Low return, in turn, means low risk. There are a couple of exceptions, for example, accumulative life insurance can provide decent returns with low risk thanks to a generous government subsidy. When talking about low or high returns, be aware that we are currently living in a period of low interest rates. Whatever our desired return, real profit opportunities are determined by the market. At the time of writing this guide, German government bonds, the safest asset available in the euro, are delivering a negative return (and that's before the costs associated with holding these bonds in your account). Therefore, low return can now be considered 0-2% per year, medium 2-6% per year and high is more than 6% per year. Each investment instrument also has a wide range of potential risk and return. For example, one can buy German government bonds (very safe) with practically 0% return or non-bank lender (high risk) bonds with 12% rate.
Another important point to consider is that only investments in companies (and lending to countries) are asset value-added (this money is used to create something new). Collecting, buying gold, cryptocurrencies and other similar asset investments are speculation or protection of value. Accordingly, if you have purchased a gold bar - this bar will not add any "value" to the safe - it will just sit there and make you worry about its safety. On the other hand, if you have bought a company bond (or loaned it to the company), the company invests this money to create and develop something. Real estate is an interesting "hybrid" investment, which is both a stable asset on the one hand, and can also be developed and create new value. The choice is in the hands of the owner. When it comes to investing in companies, it can be done in two ways: either by lending or investing in equity. The loan to companies provides a fixed return, so it has a certain "ceiling" on the yield. Investing in a company's equity (for example, buying their shares) allows for unlimited growth in value (the so-called "upside"), but this type of investment also carries a higher risk (possibility of not receiving all or part of your invested money) than loans. It should be mentioned that in both variants it is possible to lose the entire amount of the investment.
Useful suggestions on how to invest and earn
One can invest and save not only in bank deposits. The goal of this handbook is to inform about the wide range of alternative investment opportunities available to any investor. The target audience of this handbook is anyone who has established or plans to establish savings in the thousands (but not in the many millions) and who basically understands or is ready to learn what shares, bonds, investment funds and similar terms mean. The handbook content is regularly updated.
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