What are the Relative RISK Levels?
Question:
1. Savings Account & CD's
2. Government Bonds
3. Corporate Bonds
4. REIT's
5. Stock Exchange Index Funds
6. Mutual Funds
7. Stocks
I know that there are really bad examples in each category - but my question is "general" in nature.
Answer:
Looks like you already have them ranked correctly given historical risk levels.
However, currently REIT's have been on an unsustainable run and are behaving more like equities. The reason is because they are paying out a lot less income than historical levels. They normally have both bond (income) and stock (appreciation) qualities. Lately they have exhibited more stock (appreciation) qualities than bond (income) qualities.
One can also argue that mutual funds and index funds should be interchanged. This is because index funds give you the risk of the market. In theory, well managed mutual funds should give you less risk than their market benchmark and higher returns. However, most aren't able to accomplish this feat because their internal expenses are too high.
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