http://www.economist.com/blogs/freeexchange/2011/11/financial-markets

Response to External Blog “No Such Thing as Risk Free”

No such thing as risk free

After reading the blog post by A.C.S | NEW YORK on the economist, I fully agree with the written opinion that there is no such thing as a risk free investing environment. As stated within the blog, people tend to assume things, like having a lower interest rate in banks creates a higher rate of return, yet they fail to take into account that there might be inflation rates, as well as default risks.

Bonds, pensions, funds are common items that create a delusion among people giving them a confidence feeling that there are no risk involved within these investments. I believe these low or no risk options of investments actually hold a greater threat, as people don’t know the consequences. They fail to assume that at critical times, even the government doesn’t have the money to fill the gap caused by a miscalculation of an investment; this event is being reflected upon an event that is happening in Europe at the moment. Many fail to see pass things such as nominal returns, which still includes tax and investment fees. Due to the complexity of the low risk investments, various factors are usually overlooked causing a misconception of true probability.