Risk vs reward in terms of good investments is highly correlated.

The more volatile a money making or investment scheme is usually the more chance it has of swinging in value either up or down.

People with a high risk aversion may enjoy investing in risky adventures, and be in a position in life where losing a large chunk of their net worth is no big deal as they are young and earning a high income f other sources. However there is a large proportion of society, those close to retirement, or conservative investors not willing to lose.

What risk are you prepared to take with your wealth? What follows is our opinion of riskiest to most stable investments.

1. Options 
Most options expire worthless at their date of expiry. If you know what you’re doing you can make large sums of money. But if I came to you and said here is an investment, but most people who buy it lose money, and the majority of options expire completely worthless, would you want to trade such a thing?

2. Futures 
Similar in risk to options, the risk with futures comes mostly from their highly leveraged positions. An overnight 1% shift on a futures position that is leveraged 20 times can break your bank

3. Stocks 
On average stocks go up in value (based on their cash dollar value), but look a little deeper on this one. Cash money suffers from inflation. So a 3% rise in value could be in reality a loss because inflation was higher than 3%. The other thing with shares in a company and stocks is that the averages such as Dow Jones and All Ordinaries by definition remove failing stocks from their indexes, so once a stock starts to fail and go down in value, it is out of their index, thus inflating the perceived average growth of stocks.

4. Cash 
As previously mentioned, cash suffers from inflation. National reserve banks print more money, and the rest of the money already in circulation gets devalued. Keeping money in a high interest account can offset this, but there are risks with the banks going bankrupt, and taking your money with them. Thinking about hiding it under your mattress? Besides the risk of inflation, the risk of fire, theft etc makes this a risky option. It will lose value no matter what.

5. Property 
Property rises with inflation, and prices can be inflated and bubbles can burst in the short term, however the phrase “safe as houses” exists for a reason. A home will always contain some intrinsic value. Long term, buying real estate in good areas houses do not lose value. Just don’t buy at the peak of a boom, in an unsustainable trend in a risky area, such as mining and manufacturing based towns that may vanish in 5 years. There can also be high taxes associated with earnings on real estate.

6. Silver and Gold 
When you buy silver bullion, it holds is value, and does not suffer from the wild swings of other investments. The main reason we list this as the safest investment option is that it can’t be inflated, it has intrinsic value, and even if the money markets went into melt down tomorrow, precious metals would still be valued, as they can be used in jewellery, manufacture, and have been prizes for their value for thousands of years.

To reduce risk, it must be held in your safe keeping, not in a bank or other place subject to the risks outlined above.