Zero risk in an investment can mean zero returns

Quite often we come across people chasing the best performing asset class of the moment in the quest to earn superior returns with the least or, in some cases, no consideration for risks involved. For instance, for headline equity indices, the standard deviation based on their annual returns falls in the range of 35-37%, for mid- and small-cap indices it is 40-45%, for the gold price index it is about 18%, for the government securities index it is 6.5-7.5%, for bond indices it is 2-4%, for the liquid index it is up to 2%, and for the one-year treasury bill index it is about 3%. But the least one could do is to follow a proper asset allocation depending on her investment horizon, goal and risk appetite. There’s no such thing as a risk-free return, and it’s not a right-now problem based on the level of the market or the low returns on deposits, but it’s about how risk works.