One Of The Riskiest “Safe” Investments Around

Two weeks ago, I discussed the level of risk in the stock market. With the S&P 500 up almost 4% in the past two weeks, the risks are even higher.

But “high risk” is not synonymous with “sell everything and hide in a shelter.” Risk is a part of investing. Obviously, we must accept risk in order to generate returns that beat the income available from risk-free investments.

Not As “Safe” As You Think…

It is possible many investors don’t understand that “risk-free” investments actually carry risks. For example, the 10-year Treasury is considered a risk-free investment because there is little, if any, risk of default.

Investors lending money to the U.S. government are very likely to get all of their interest payments on time and to receive 100% of the principal at maturity.

But there is a risk… the risk that the principal will have less purchasing power. This could happen if inflation exceeds the interest rate.

For example, the latest consumer price index shows inflation of about 1.6% a year. Rates on 10-year Treasury bonds, meanwhile, are near 0.95%. So, there is a good chance that inflation will outpace interest payments.

Investors may understand that risk, but they may not quantify it. One way of looking at risk in bonds is to think of how the price will drop if interest rates rise. On the 10-year, the price could drop about 8% if rates rise 1%. In other words, investors could lose more than eight years’ worth of income if rates rise to 2%.

In those terms, I believe 10-year Treasury notes are among the riskiest possible investments. I much prefer a basket of income stocks that can keep up with inflation and can rally from declines.

An Even Better Way…

What’s more, we can juice the income we receive from a basket of income stocks. We do this by using a simple method that’s been around for years and allows us to earn hundreds (sometimes even thousands) of dollars in instant payouts.

For example, I just recently recommend adding Colgate-Palmolive Company (NYSE: CL) to the Maximum Income portfolio.

You’re probably already familiar with this $73 billion household consumer giant. It’s a defensive stock that carries a yield of about 2% at current prices.

Like many of the stocks I recommend, the chart shows an Income Trader Volatility (ITV) indicator “buy” signal.

Fundamentally, the company is improving its profits margins as sales are increasing. This is shown in the next chart. Profit margins are shown as bars and revenue is shown as the solid line.

Source: Standard & Poor’s

This combination points to higher earnings.

Action To Take

Now, what most investors who are bullish on the company would do at this point is simply buy the stock and wait for their dividend payments to come in…

There’s nothing wrong with that. But over at Maximum Income, we have a better plan.

That’s because I also know CL is a great candidate for an instant “Hollywood Payday” opportunity. In fact, this stock is one of the holdings of The Actors’ Fund of America Pension Plan.

What does that mean? Well, it all has to do with a little-known tactic that’s been used by elites to generate income while doing little to no work at all…

Want the details? Go here now to learn more…