Investment vehicles ranked according to risk and return


Risk and return are usually correlated with each other. Where there is low risk, there are often lower returns, and in the case of high risk there are often higher returns. In this article I will be ranking the different investment vehicles according to average return, and the average risk from lowest to highest.

*This article is based on generalisations and different investment vehicles may over perform or under perform in compassion to the average bench marks.

Low risk assets:

Money market funds 

Money market funds are considered a better alternative to saving accounts. If you wish to learn more about money market funds you can follow the link (). Also we have reviews on money market funds profiles that are available using this link (). 

The average return on investment that can be expected from money market funds is 3-6% returns per annum.

Mutual Funds

Mutual funds are a collective investment scheme that are actively managed by a professional fund manager. For this active management of the funds they usually  charge high fees .To learn more about mutual funds and if they are a viable investment option for you , you can follow the link (). 

The average return that can be expected from mutual funds can range between 4- 8% returns per annum.


Bonds are considerably expensive and a long term investment. You can get exposure to the bond market through investing in ETF bonds. If you wish to learn more about this you can follow the following link (). We also have reviews and information on the different ETF bonds that are available in the South African market.

The average return on investment that can be expected can range between 4- 10 % returns per annum.

Moderate risk assets:

Unit Trust 

Unit trusts, mutual funds and ETFs are similar in this nature as they offer investors diversification and  are collective investment schemes. However, they have significant differences from each other and if you wish to learn more about unit trust you find more information using this link (). There are also reviews and profiles of different unit trust available on this website that can be found using this link ().

The average return that can be expected from unit trust is between 4- 10% 


ETFs offer a diversified basket of assets at low costs. They are great consideration for beginner investors and if you wish to learn more about ETFs follow the link (). There are also reviews and profiles of the different ETFs that you can find available through the link ().

The average return you can expect from ETFs is between  7 – 14% returns per annum.

Blue- chip stocks 

Blue -chip stocks are stocks in blue chip companies. Blue chip companies are companies that are publicly regarded as businesses  that sell quality and widely accepted products. An example of a blue chip company in South Africa would be Woolworths, Disc-hem, Clicks, this are just a handful of examples. There are blue chip company review that can be found on this website using this link ().

High Risk 


Stocks can be considered a high risk investment, but this is dependent on the stock. Most are considered to be moderate risk, and some are regarded high risk. For example stocks in pharmaceuticals and bio tech are considerable high risk stocks. The stocks of companies underperforming and facing bankruptcy are also considerably high risk stocks. That said this stock can also offer investors lucrative opportunities. 

The average return that can be expected from high risk stocks can range between -(70%) to 25%.

Note that the negative sign before the 70% is representative of potential losses that can be incurred.

Penny Stocks

Penny stocks are stocks that are priced under R1.00. There are several listed penny stocks on the JSE. They may seem attractive because they are so cheap and cost “pennies”. However it is important to note that there is a price to be paid and that is in the form of risk. We have a few profiles of penny stocks listed on the JSE that can be viewed here (). 

Penny stocks can produce an average return of around -(10%) to 30% in returns per annum. Note that negative sign before the 10% is representative of potential losses that can be incurred. 

IPO (stocks)

Initial public offerings, these are the first public offerings made by company to the public of their shares. They often lure in a lot of investors, as investors are eager to get a good and early deal on a company that they expect to do exceedingly well. IPOs are high risk investments that reward the investors with great returns, or considerable losses. 

The average return offered by IPOs can range from  -(3)% to 44.8%

Here is a general idea and overview of how different investment vehicles in the market can be compared to each other in respect to risk and return.


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