True if you consider all the inputs. Like skill, access, tax treatment, time, risk and more. You always bring more to an investment than money. You need to know what else is there.
Investment yield is a function of exchanging outputs for inputs. It is always fair. You cannot get something for nothing. It is however possible to get nothing for something. The market will reward you for bringing some things and it will punish you for wanting other things.
For example. A 5 year bond and a 1 year bond both pay the same rate of return. The interest rate on the 5-year bond will be higher by the value of your commitment to leave the money there for four extra years. (Reward) Liquidity has a value and it may be an input you can bring to the market. If you could wait the 5 years but instead purchase and reinvest five one year certificates, you have a valuable input that you are not being paid for.
Why do second mortgages yield more than first mortgages? Because risk has a value. If you bring risk tolerance to the market, the market will pay you for it.
Why do importers of cocaine require a higher profit margin that importers of apples? Illegality is a risk and they need to be paid for it.
Why are dividend yields typically lower than interest yields. Because the tax rate is lower and the after tax is about the same. (Not as true today as it usually is)
Social value. Even though limited partnership interests in feature films are almost guaranteed to return nothing, they have social value that you may wish to own. The market will punish you for wanting this, On the other hand, you cannot go to the club and brag about a GIC you have acquired.
Availability. If the smallest unit is $10,000,000 the issuer will need to pay more to attract investors.
Special knowledge. Real estate developers expect a yield higher than people who buy bonds. Risk is part and they bring specialized skills to the investment.
There are many more factors that influence rate of return. Something over 40 at last count.
The trick is to find investments that best match the inputs you can make available. That way you get paid the most that you can get given your resources, abilities and limitations.
Take inventory of what you can bring to transaction and be sure and get paid for it.
Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. firstname.lastname@example.org