Menu
Skip to content 
The financial industry does its best every day to get our attention. In magazines, on posters or on the Internet, for example, new, Promising returns on advertising made. Also, new products with new names appear constantly, so that we are to invest our money driven by greed.
Fortunately, there is a Rule of thumb for the classification of financial products or investment opportunities, which has always applied. The magic triangle of investment helps you with this, Understand investment opportunities and classify offers to be able
How it works exactly and how you can avoid big investment mistakes, you will learn in the article!
In the magical triangle of financial investment, the following oppose each other Tension between return, security and liquidity opposite. Here, the rule of thumb is that, as a rule, only maximum 2 of the factors given at the same time can be.
To better understand this, let's take a closer look at the 3 factors:
We all want it, the return on investment. Return means a Profit growth of our invested money and is usually measured per year (p.a.) and expressed as a percentage (%)..
A broadly diversified basket of shares like a ETF on the stock market (see example in the chart later in the article) yields about 7% return per year.
Returns can be generated by interest, dividends or simply increases in value. Since returns are often promised in advance for advertising purposes, only a retrospective view makes sense.
Your key to success! Discover our top recommendations from real testimonials.
Attention, here it becomes special!
On the one hand, security is provided by the Probability with which you will get back your invested capital. So how likely is a total loss.
Furthermore, under safety the Amount of the possible damage considered. Surely you have seen the wild movements in the stock market on a chart. This Fluctuations are referred to in the financial world as Volatility is the term used. In the chart below, you can see that you would have built up a huge fortune in US stocks over the long term since 1870. However, since many investors get "cold feet" during fluctuations and do not hold their shares long enough, they sell at a loss.
When we talk about risk, we do not necessarily mean a total loss. Due to fluctuations, a partial loss or the amount of the loss can also be understood as risk.
Would you like to understand the individual correlations even better and develop a solid investment strategy for yourself? Then you should read the FinanceTimetable use it for this!
Next start in autumn. Limited places. Therefore, sign up for the waiting list.
Investments and financial investments sometimes require you to forego your invested capital for a certain period of time. Or at least you can only access it with a delay.
You have high liquidity/availability when you can access your money as quickly and easily as possible.
A call money account, for example, has a high availability, as you can withdraw your money from the ATM at any time.
If you have bought an apartment and you want to get your money back, the situation is different. In this case you first have to find a buyer for your property, negotiate the price and get your money back only afterwards, i.e. delayed.
| Attachment | Return on investment | Risk | Availability |
|---|---|---|---|
| Shares | High | Medium | Medium-High |
| Real Estate | Medium | Medium-High | Low |
| Bonds | Low | Low | Middle Ring |
| Cryptocurrencies | High | High | Medium-High |
| ETF / Index Fund | High | Medium | Medium-High |
| Call money account | Very low | Very low | Very high |
| Precious metals (physical) | Low-Medium | Low-Medium | Low |
"Intelligent people learn from the mistakes of others".
We have compiled our top selection for you from all our tests and experience reports:
While the financial markets, their products and marketing measures are constantly changing, the magic triangle still holds true.
Although the last few years, for example Shares or Cryptocurrencies While the market for the first time promised (and in some cases delivered) high returns, the tensions with security also became apparent in 2022.
You can quickly check what risks an investment has with the rule of thumb for money investments Switzerland-wide. With high probability there are no investment which fulfills all 3 aspects of the triangle. If you find it, you have discovered holy grail - please share your find here 😉.
By the way, sometimes already 2 factors from the triangle are strongly in tension. Thus there are usually No return without risk. If someone promises you that, be skeptical!
Sources: Graphic Morningstar Stock chart historical
3 responses
Thanks for the unexciting and nicely explained listing. Did you leave precious metals out on purpose? I find a few ounces of gold incredibly comforting and portable.
Thanks for the feedback.
I am happy to add precious metals. Unfortunately, they are not productive assets. Of course, there are still arguments in favor 🙂
Switzerland-wide is good but I would argue that this is valid even beyond the country's borders 🙂