In matters of investment, as in life, most people try to avoid risk as much as possible. While this is certainly a rational pursuit, the methods that people commonly use to assess risk are about as accurate as their daily horoscopes. For example, many people assume that investments that are not regulated by the government are inherently more risky than their regulated counterparts, but in reality, these unregulated investments are often both safe and lucrative.
The logic that leads people to believe that regulation is equivalent with security argues that if the government has regulated an industry or a particular class of investment, then it must be safe by virtue of government intervention and oversight. Not so! In fact, regulated investments—including shares, futures, and many other investment classes — are just as prone to volatility and risk, if not more so, than unregulated investments.
Consider someone who invests in mining shares. If this person is laboring under the belief that government regulation is equivalent with security, he might simply purchase the shares over the internet and without seeking the proper financial advice beforehand. He may not realize that mining shares are a risky investment, however, nor might he realize that his investment is not guaranteed just because it is regulated by the government. So in trying to avoid risk, this man stumbled into an investment that can guarantee him nothing but uncertainty and that is highly likely to lose him money. In situations like these, the fact that his investment was regulated is little more than a consolation prize.
While most people steer clear of unregulated investments, I think they present opportunities that are often too good to pass up. In my view, if the government hasn’t regulated a specific class of investments, it’s not a sign that the investments are unsafe or risky by definition: to the contrary, it signals that the investment is secure enough where the government does not think regulation is necessary. Property investments are not regulated, but that doesn’t mean they can’t generate strong returns or that they aren’t safe. For example, there are property development companies that provide great returns to investors. One springs to mind that has never missed a due interest payment and offers 100% security cover by means of a first legal charge over the property. It may not be regulated, but it’s a much more secure investment than the man who threw his money away on regulated mining shares—go figure.
If you want to make the most of your money, don’t allow yourself to be drawn into a false sense of security by regulated investments. Or better yet, ask for a copy of my F.R.E.S.H. investment special report and learn how you can really enhance your income and your investments!