Where Can You Find a Guaranteed 10% Return?

June 24, 2007

Making his money work so he doesn’t have to, that’s the goal for today’s guest writer, Lazy Man.  If you’re interested in learning about using Prosper or alternative income streams, subscribe to his feed.

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J.D. from Get Rich Slowly had a reader ask where I can I find a guaranteed return of 10%. The short answer is that there is no place where you can get a guarantee of 10%. If they were common, no one would be buying treasuring bonds, CDs, or putting money in high-interest savings accounts at much cheaper rates. In fact, if a 10% guaranteed investment did exist, and it was easy for the common man to get it, inflation would adjust upwards of that 10% level. Business owners would realize they could be more profitable taking that guaranteed return rather than taking a risk that their business would outperform it. Some would probably just quit the business all together, but others would simply charge more for their products, because they are inherently taking more risk.

The article focuses on a series of solutions that I thought weren’t particularly related to the question. The solutions mentioned require an extraordinary amount of luck in being at the right place at the right time, with the right knowledge. None of them really scale well as you can’t plan for such opportunities. One example was a person who visited a donut shop every day and one day found out how he could help out the shop and make some money for himself. How many thousands of dollars did the donut shop visitor have to spend eating donuts there everyday to make his $3,000? Is he going to start eating donuts at all the donut places in an effort to find more stores that need new donut mixers?

Some of the real estate examples in the article didn’t strike me as accurate either accurate either. Sell a place for 107K and there’s going to be transaction costs that probably bring it back to around 100K meaning that you’ve wasted a lot of your time. And if you can’t sell it right away, you’ll start losing money. It’s easy to make being a landlord seem like an easy way to make money. “$20,000 can often easily kick off $2,000 per year in cash” is a huge stretch. More than likely, you are going to lose money each money on the rent. There’s a chance that you can find one bargain and maybe rent it for positive cash flow, but this is 1 in 10,000 search in many places – not easy by any means. For an example, in my old Boston suburb, there’s a difference of $500/month in my mortgage and the rent. I hope to break even with tax benefits, equity, and appreciation. It’s a similar situation out in Northern California where I moved to.

In the end, you might not be able to get a guaranteed 10% return. However, many experts believe that you can come very close with a mixture of securities over the long-term. Just like you can’t guarantee me there’s no such thing as a pink penguin, I can’t guarantee you a 10% return. We can only look at the vast amount of evidence to date and make conclusions. Some years you’ll make more and other years you’ll make less, but it seems to be the case that in an average lifetime, you’ll probably be in the 8%-12% range. Such results have been proven over and over again.

In a slightly unrelated note… in the comments J.D., seems to have found that blogging is not passive income. That’s exactly why I call blogging alternative income. I made the same mistake thinking it was “passive” when I started because it can earn me money while I’m on vacation. However, I probably work twice as hard when I’m blogging than I do at my day job.

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Ben
Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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13 Responses to Where Can You Find a Guaranteed 10% Return?

  • Neal

    Some investment options that give 10% monthly return or more are usually available to select few, not to the masses. In forex trading for example, returns of more than 10% per week can be quite normal. If you are ready to invest a minimum of USD100k, I definitely know an investment that can give a guaranteed monthly return of 10% return. Your capital is even GUARANTEED. There’s even a formal agreement to be signed and the contract is only for a one full year. BUT like i said, you need a minimum USD100k, and not many people has that kind of money to invest.

  • Jim

    Vincent is the next Madoff

  • marita

    Seems like Vincent is full of bs!

  • jim

    Vincent! please tell us the company in canada that gives such a great return!!!

  • Vincent

    I know a company here in Canada that gives a 10-15% guaranteed return. I have been investing with them for the past 5 years and they even seemed to profit during the recession. The beauty is that the minimum is 5k! its definitely rare to find it but they are out there!

    • Alex

      Hello Vincent, Is this company still performing this well now? if they are, would you be kind enough to share more information about this company and their type of investment?

  • Ben

    Matt, talk about weighing risks and rewards! Of course, I imagine many people in combat zones are there for reasons other than the 10% return. It is nice to hear that the government has a program to help build the military members financial future while they’re serving the country. I imagine it’s kind of hard to manage an investment portfolio in the middle of a war.

  • Matt

    This may be a little off topic, but I know one way for a guranteed 10% return. If you are in the military and are in a combat zone such as IRAQ, there is a military savings program that allows money to be invested at a guarenteed 10% return over the extent of the deployment.

    For those that don’t want to be in a combat zone for a 10% return, investing in an equities portfolio over the long run has returned about 10%.

  • MoneyNing

    However, I probably work twice as hard when I’m blogging than I do at my day job.

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    Agreed 100% :) No one without a blog will ever truly appreciate the amount of work that’s been put into the blogs!

  • Kevin

    Commenter Victory makes an interesting point about matching contributions. If you have an employer match you get much higher guaranteed rates of return since you effectively double your money on day one.

    You’re right that the “answers” provided by the article don’t really give the questioner what they wanted, but I actually like the doughnut portion. All the author is really saying is that great opportunities arise all the time that can give you a lot more than a 10% return, but you have to be paying attention to find them. In the doughnut case, the guy was listening to others with an ear to how he might solve their problems and make some money doing so.

    And one final note: all penguins are pink — on the inside!

  • mbhunter

    It’s tough to get a guaranteed 10% return if you’re excluded from all of the goodies that are available to qualified investors (a.k.a. the rich). Then there’s little trouble.

  • Victory

    In Australia we have a government superranuation co-contribution. For every $1 you personally contribute to your super fund, the government contributes $1.50, thats a 150% guaranteed return. The downside is you can’t access that money until you’re 60 or you pay hefty taxes on it. Otherwise, its taxfree and accumulates interest, snowball of money!

  • Time

    This isn’t completely true. I just earned a guaranteed 10% on a one year cd. Also, you could join the military and be deployed to a hostile fire area and earn a guaranteed 10% on up to $10k in the military’s Savings Deposit Program (SDP).

    but point taken. ;o)

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