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Decision-making aid Magic Triangle

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The so-called "magic triangle of investment" describes the three most important aspects of investment: return, security and liquidity/availability. The best form of investment should provide a high return with maximum security and permanent availability.

In reality, however, investors always have to cut back on one of the three cornerstones and ultimately weigh up which aspect is more important to them. For the stronger one component of the magic triangle is focused on, the weaker another becomes. There is no way that all three corners are weighted exactly equally.

Example: If you choose a very high-yield investment, either security or availability will suffer. If, in addition, security is to play a major role, you will have to forego liquidity. It is possible, for example, that with funds you can achieve a high return compared to other forms of investment and at the same time benefit from a safe investment. On the other hand, you have to reckon with longer terms during which your capital is tied up and thus not available.

Checking the reliability of investment products

By the way, you can also use the magic triangle to check the seriousness of investment products in If, for example, providers promise an above-average return with a very high level of security at the same time, you should take a close look. In this case, the offer may be dubious.

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The three aspects of the magic triangle of investment


The yield of an asset or financial investment is its income. This can be dividends from shares, interest from securities or increases in the value of foreign exchange. In addition, other distributions can also be counted as part of the return. On the other hand, if an investment yields high returns, investors must expect high fluctuations in value or losses. In addition, possible fees must also be taken into account when investing money, which can reduce the return.


Investors can increase the security of their investment by diversifying as widely as possible. They invest their money in various ways, for example in securities, funds and fixed-term deposits. Security is also provided by various mechanisms such as the European Deposit Guarantee Scheme. Here, banks undertake to protect customers' deposits up to a certain amount, usually 100,000 euros, in the event of their insolvency. Some banks increase this safety net through their own mechanisms, such as the savings bank group or the cooperative banks. Consumers can also achieve security by investing in stable assets for financial investment. For example, buying gold can offer a high degree of security. The same applies to government bonds of countries with high credit ratings.


Liquidity is also referred to as availability. Usually, the capital that is invested is tied up for a certain period of time. The shorter this period, the more liquid the investment. In most cases, the yield is reduced to the same extent as the liquidity increases. For example, overnight money with daily availability usually yields the least interest.

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