I hope Marvin slammed the phone down as soon as he heard the "deal." I don't know the company, but any time someone says you can earn 100% within months, I run as fast as I can. If I have a car, I jump in and floor it. There is no way anyone can expect to double their money in months unless they hit it lucky on a lottery ticket or at the casinos. At least with those bets, you've actually got a chance. With these scams, you don't even get that.

This is just another phone solicitor preying on an uninformed investor. Hopefully, none of you readers listen to these thieves any more. But my point in this column is to understand how risk is easy to measure when investing. It all has to do with return expectations. The higher the return expectations, the less likely you will make them.

The risk curve starts with a 3 month treasury bill. There is no risk to this investment unless you believe the U.S. way of life will end in 3 months. If you do, then you shouldn't invest in anything because you won't be here to enjoy it anyway. The 3 month bill right now is paying an interest rate of 3.2%. Compare all of your potential investment yields to this one. In other words, if you have to invest for longer than 3 months, you should expect to get more than 3.2% for your investment. But that's only the time element.

There is also the risk element. The higher the risk, the more return you should expect because you know that without risk you can get 3.2% on your money for three months. With stocks, where there is no guarantee of any kind, you expect much higher returns. Of course, with higher returns, there is the much higher risk of losing money. That's why stocks can be higher returning investments than bonds. There are no assurances of anything but if the earnings are made, the stock price goes up and dividends can be paid. The return from a successful stock is always greater than a bond because the risk is much higher.

So the next time anyone says you can make a very large return in a short period of time, don't even think about whether it makes sense or not. It doesn't. High returns mean extremely high risks. Another benchmark to remember: Over many decades, on average, large stocks have returned about 10% a year, including dividends. That's an average so some years there were losses. Check from March 2000 until the end of 2002 for a sample of those.

The same comparisons can be made with dividends. When the dividend is very high, it is probably because there is a risk it won't be paid. If you look at GE's dividend (at this writing, it's 2.5%), you can use that as a benchmark for other dividends. It's almost certain GE will pay this dividend. It has plenty of cash flow to cover it. Any dividends that are much higher than this one, say in the 7% or above level, have to be carefully scrutinized. Even if they come from an REIT (Real Estate Investment Trust), you have to know that the dividend is not as sure as the GE dividend.

The idea here is to be aware of certain levels of interest rates. The lower the rate, usually, the more sure you can be of the payment. However, the higher the rate, the more unsure you can be. There's still no free lunch