What form of investment carries the highest risk?

Question

A. Shares

B. Property

C. Unit trusts

D. Fixed deposit

Why?

Answer 1

Defintly shares, as they do not have :

1- a fixed income/interest

2- they value is not fixed

So basically, you do not know your assets nor your income !

Answer 2

A.  Shares          

Because the amount of your loss could be substantial.   Potentially everything.  Sometimes shares go down by large amounts and take years to recover, if they recover at all.  The others all have a risk.  But, on a percentage basis, the potential loss would likely not be as great.

Property -  Loss is limited to the amount of your investment.  Your investment in the property  normally increases over time as you make payments.    Consider the recent crises:  Many people have lost homes, but the dollar amount of their loss wasn't as great because their equity in the amount was no where near the amount of the loan.

Unit trust - is simply a collective investment.  It's risk would be no more, or less, than the underlying investment principle.

Fixed deposit - The only one with a guaranteed loss.  Due to inflation.  Over time the only fixed deposit that will beat inflation is TIPS.  But that only keeps up, there is no real gain.  But the loss is in buying power, the principle rarely goes down.

Answer 3

Obviously Equity (Shares)

Answer 4

D.

Fixed deposit.  Over time you'll lose buying power from taxes and inflation.

Answer 5

This depends on a number of factors. Currently houses are a high risk in the sense that they may decline another 15% in the US and possibly as much as 30% in the UK. Purely on risk, shares has the highest risk, but that depends if you know what you are doing. It can actually be the most profitable.