Low risk strategies with moderate returns

[jepp]

So I have a bit of a problem, I have 600K (euro) and am looking to generate some income with that, without taking excessive risks.

Normally you'd say: just invest it and sit back and relax, but almost everything is stupidly expensive, and yields are so low, or even negative here, and I'd probably feel more comfortable trading with it with limited risk.

No crazy stuff, no leverage or anything like that, I like an equity curve that looks like tbills

What could I expect, realistically, 10% yearly would be great, though i suppose that figure will not be easy to achieve..
Or is the chance of ever making that work <0.02%, let me know so I'll simply stop bothering

Any recommendations?

 

[Jdesey]

If yo are looking purely for yield, and low risk, trading is NOT the way to go. The results are not consistent and risk is considerable. I know the rates are not great right now, but I would think a High Grade corporate bond fund is the way to go. I mean A rated or above, yield might be about 6%, but I would not count on any appreciation as that requires interest rates to go down.

 

[jepp]

If yo are looking purely for yield, and low risk, trading is NOT the way to go. The results are not consistent and risk is considerable. I know the rates are not great right now, but I would think a High Grade corporate bond fund is the way to go. I mean A rated or above, yield might be about 6%, but I would not count on any appreciation as that requires interest rates to go down.

6% yields from investment grade bonds? Not even junkbonds yield 6% over here (euro)
Govt. bonds are mostly negative unless you want to hold 20+ year bonds (in a depreciating currency) with < 1% yield.

There is a global corp. bond euro hedged ETF available, but it yields about 2.5%, after taxes im left with about 1%... that's not really working out to well

 

[lawrence-lugar]

Low risk strategies with moderate returns

Impossible.
Low risk = Low returns -- You can't deviate from that basic trading/investing Law,
Moderate risk = Moderate returns.
High Reward = High risk,

 

[comagnum]

Just think about being a fanatic about capital preservation as the ultimate priority - that doesn't mean you shouldn't put the money to work in the markets. People with larger accounts may choose to put some of the capital to work with a managed futures/commodities (CTA) fund(s) with proven track records.

'I never new anyone that got rich putting their money in the bank' - Warren Buffet.

 

[Jdesey]

6% yields from investment grade bonds? Not even junkbonds yield 6% over here (euro)
Govt. bonds are mostly negative unless you want to hold 20+ year bonds (in a depreciating currency) with < 1% yield.

There is a global corp. bond euro hedged ETF available, but it yields about 2.5%, after taxes im left with about 1%... that's not really working out to well

Damm! I just looked at an American Bond fund... GROSS,, 1.58% last twelve months,,, man I did not realize that yield had come down so much... maybe look at a REIT.. I do not invest for income so I really do not know.. but I am sure that trading is not going to equal Low Risk

 

[viruscore1]

Low risk strategies with moderate returns

Impossible.
Low risk = Low returns -- You can't deviate from that basic Law,
Moderate risk = Moderate returns.
High Reward = High risk,

You forgot to include the risk component. Sure you can potentially achieve higher returns but more risk equates to more losses, not less. Very romantic idea, but in the movie he could have been charged with operating a brothel and have a criminal record for the rest of his life. and/or catch a STD hahaha, god forbid aids, or teen pregnancy and ruin his/her future. Nothing wrong with hitting singles and doubles with a diversified blue chip portfolio. Selling otm put options to acquire stock and selling otm call options to liquidate stocks. There's a little more to it than that but you'll get the idea. Don't use a financial advisor they'll take the first 5% regardless if you make a penny. Learn to manage your own money. Real life is not like in the movies...

 

[HobbyTrading]

What could I expect, realistically, 10% yearly would be great, though i suppose that figure will not be easy to achieve..

That is a rather challenging target if you are looking for a solution with low risks. Last year an investment in USA equity (either through ETFs and/or mutual funds) would have gotten you close. This year it seems that an investment in European equity would be better. Investments in bonds (again: through ETFs and/or mutual funds) seems to get you in the range of 4%~6%.
If you would choose the "lazy solution" and put a bit in all of these you would get some 5% annual yield, before income taxes. (all mentioned yields are counted in EUR).

 

[beerntrading]

Damm! I just looked at an American Bond fund... GROSS,, 1.58% last twelve months,,, man I did not realize that yield had come down so much... maybe look at a REIT.. I do not invest for income so I really do not know.. but I am sure that trading is not going to equal Low Risk

Why a REIT of all things now??? That's the mindset of buying your first home in 2006 (I bet they're just recovered from foreclosure and are ready to buy their second home now).

So I have a bit of a problem, I have 600K (euro) and am looking to generate some income with that, without taking excessive risks.

Normally you'd say: just invest it and sit back and relax, but almost everything is stupidly expensive...

Any recommendations?

Bide your time and wait for lower prices.

And you can do limited risk trading, it's entirely possible to have an absolute limit on the downside while getting reasonable upside exposure. But as everyone said, looking for 10% returns AND limiting risk just doesn't exist.

 

[ironchef]

Welcome to ET. There is no simple answer for you. It all depends.

Depends on how old you are, your time horizon and if/when you need the money. If you need access to your money now or next year, keep it in cash.

If you are young (you are 35) and don't need the money for another 30 years, investing in equity is not that risky even if it is at or near tops. A more reasonable approach is to put your money in a basket of diversified instruments but leave a small percentage (<10%) to trade.

I have been studying Kelly criterion recently and maybe you should too before you start.

Good luck and best wishes.