Banking stocks can be pretty risky because of how complicated their businesses are. They don't merely take deposits and make loans anymore. They have very convoluted trading operations and deal heavily in derivatives. During the financial meltdown in 2008, many banks disappeared because the actions they were taking were so risky, and the banks that didn't go under suffered monstrous losses. Because of how interconnected they are, there weren't many banks that escaped unscathed. Banking is definitely one industry I am not interested in as an investor. If you want stable dividends, REITs are far more predictable and far safer, plus their tax structure necessitates paying out 90% of their income in dividends in order to maintain a tax advantaged status.
Yes, sorry, I did overgeneralize a bit too much. However, events like the 2008 crash are few and far between, and if you really pay attention, can be foreseen. While the crash was fairly sudden, the build up happened over time; something had to give eventually. Also, from the POV of a Canadian, our banks were fine
And of course 3-5% profit per year is a very profitable investment.
Suppose that you have $10k allotted for investment and then you invested it in bank stocks. After one year, you would just get $50. $50 can be earned by you in just a day or two of working. Is it worth investing a huge amount of money, waiting for a huge amount of time, just to get something that you can make for a short period of time? I'm sure your answer would be no.
Investments aren't supposed to be 100% safe. You should take risks so you will make better profit. If you can't do that, then investing is not for you.
To begin, 5% of $10k is $500. If you're making that in 2 days, you're well off.
Passive income should be safe; it's something you want to have that manages itself. If you're taking big risks, then you're looking for
big profit. That isn't the point of passive income.