Risk vs. Reward in Investing
Walking the tightrope between risk and reward.
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Risk versus reward—it’s perhaps the toughest challenge in all of investing.
Wouldn’t it be great if the least risky investments were also the safest? Too bad the world doesn’t work that way. Assets that are considered safer usually pay lower returns, and those that are riskier may pay higher returns. Why? Because potential reward is the enticement for taking on higher risk.
Are you considering making an investment, but unsure if it’s worth the risk? Here’s a general framework for analyzing the relative riskiness of stocks and bonds.
The risk vs. reward trade-off
Generally, investors tend to be risk averse. Their goal is to achieve the highest…
