Dreams of the Perfect Investment
Assume for a moment that all the good points of every investment could be combined into one perfect security. Here is what it would do for you.
1. It would be safe in the sense that it would return a dollar for each dollar invested.
2. It would also be safe in the sense that it would not shrink in purchasing power as a result of inflation. Its value in dollars would increase along with other prices.
3. It would give a satisfactory percentage yield.
4. The yield would start at once at a satisfactory level – not be artificially set up to start at zero and increase over the years in such a way as to penalize early liquidation.
5. The yield would continue indefinitely or for the life of the investment.
6. There would be no selling charge or other expense for making or holding the investment.
7. The investment would be liquid – that is, convertible into its original dollar value on short notice.
8. Money could be invested in a lump sum or periodically in smaller amounts, but in the latter case there would be no penalty or loss if such payments were discontinued.
9. The investment would offer a chance for long-term appreciation and participation in growth.
Naturally no investment can have all those qualities. Every investment, no matter how good, has two or three drawbacks that affect its advantages. There are no “perfect” investments.
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