Lesson 36 Control Risk
A properly diversified portfolio has a much higher probability of success than does a risky one. Aim for the lowest risk possible that will meet your investment rate of return goal.
Risk and Reward Are Related
Investors are systematically rewarded for accepting risk. You cannot expect to have real returns in the markets unless you accept some risk. Treasury bills, CDs, and money market funds have historically generated almost exactly the rate of inflation. On an after-tax basis, they are losers.
Investment advisors and economists are fond of using the term “standard deviation” to measure risk. This term is useless in conversation with the average investor. However, if you were to substitute this with the ...
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