Date: Mon, 17 Nov 2003 07:39:31 CST
From: "HW \"Skip\" Weldon" 
Newsgroups: misc.invest.financial-plan
Subject: Re: Investment that's better than the prime rate?
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On Mon, 17 Nov 2003 07:16:17 CST, zhendsch@yahoo.com (zak) wrote:

>> I want to know if there's a low-risk mutual fund (or any other
>> investment device) that is strongly correlated to the prime rate and
>> produces a return that's equivalent or higher than the prime rate.

>I suspect that the investment you are looking for doesn't exist, just
>based on first principles.  If there were a safe way to earn better
>than the prime interest rate, why would the bank loan money to you? 
>They should just invest in wherever you find to invest the money.


First, you're right.  There's no "suspect" about it.  

Second, the investor should understand that by its nature, a "low
risk" investment should outperform a "risk free" investment.

This is why many advisers recommend we compare like investments - low
risk to low risk, and risk free to risk free.  We distort conclusions
when we compare dissimilar things.

If he does that objective analysis, he won't find a risk free return
that (net or gross) currently pays what the debt currently costs.

(If anyone does, please don't post it here where everyone can see it.
Call me, I'll make your dreams come true.)  

-HW "Skip" Weldon
 Columbia, SC