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When two different people ask about the best high return investments, they are both speaking about two different things. Both will have different answers about what  high return investments mean for them individually.

However, there is some general agreement about what the high return investments are all about and when determining whether your specific investments meet this requirement, you should consider the following as well:

Above-average return for that class of investment. With some investments, this is easy to determine. If you have a savings account that pays 3%  and is FDIC (US), CDIC (Canada) or has other government-backed insurance, while other comparable savings accounts pay just 2% on average, then your 3% is technically a high return investment.

This highlights a second point: Asset classification. When looking at whether you are achieving high returns, you need to classify the asset being measured. This is also difficult but likewise mandatory.

Bonds are also easily comparable because you can lump one specific bond in with others by virtue of their Investment Grade or particular Rating. In other words, one BB-rated bond with a yield of 8% may seem like a great return but if you compare it to other BB-rated bonds where the average yield is actually 9.5%, it may not be so lucrative after all. And with bonds, you should consider yield above all else (e.g. Coupon) unless taxation is a high concern at which point your Bond returns may not be factor at all (this steps beyond the scope of this page…).

Stocks are a little trickier because categorizing a single stock into a single category becomes tricky and extremely subjective. For example, one bank stock can be categorized as a financial services stock, but it can also be Large Cap/Blue Chip or a Small Cap (or something in between) as well as a Growth Stock or a Value Stock (or Blend), as well as a Dividend play and so on and so forth. As you can imagine, this is not easy… with a bank stock of all things! Of course, this categorization process can get more complicated with other types of stock.

Mutual Funds can also be extremely difficult to categorize because of the sheer volume of securities held within a mutual fund. One nice thing with mutual funds is that Morningstar has endeavored to categorize mutual funds. This makes comparing their returns a lot easier, so your high return investments with mutual funds can become easier to find but also more difficult because not all categorizations are completely accurate. So, you will need to be careful with this.

There are other types of investments where you will care about the rates of return. However, we can see by the above that different investments will be more difficult to categorize in terms of their high returns (or lack thereof).

Risk-Adjusted Rates of Return is also difficult to determine because risk is not only extremely subjective by definition, but it differs from investor to investor.  While we cannot generalize what risk means for individuals, the following are standard risk measurement tools:

Standard Deviation. This measures how the fluctuations of a given security deviates from its mean.

Beta measures how much a security deviates from the market as a whole.

Volatility is a measurement of how much a price will fluctuate and is not only subjective, but difficult to pinpoint given that Historical volatility (proven) is not always indicative of future, or implied, volatility.

With these risk measurements in mind, finding high return investments will have low standard deviation, low beta, and low volatility while achieving above average returns. This is theoretically impossible. However, if one can achieve greater than average returns given the risks, then that is deemed to be a high return investment.

These types of measurements are essential when looking for high return investments. It is not just a matter of rate of return obviously. Risk tolerance, asset type, and diversification need to be examined when seeking investment opportunities.