The Savage Truth on Money, 2nd Edition

CHAPTER 6

THE SAVAGE TRUTH ON INVESTMENT CHOICES

Balancing Made Easy

Balancing Risk and Reward

When you move beyond the basics of credit and debt, and have your “chicken money” set aside, you’ll be faced with quite an array of investment choices. The whole idea of investing is to make your money work for you as hard as you work for your money. But the Savage Truth is that every investment choice you make is impacted by your own perception of risk and reward. While your goal is to make your money grow, there is always a downside to investments—a possibility of loss, or illiquidity, or misunderstood costs.

Although you cannot be absolutely sure that your investment decisions will be correct, at the very least you should understand all the risks and invest when the balance is in your favor. Having the knowledge of risks and costs tilts the odds in your favor—and helps you avoid emotional responses that lead you astray.

It’s always wise to get professional advice when it comes to your investments, but how will you know the advice is good if you don’t understand the basics? This section is intended to give you that basic knowledge you need to ask the right questions—and sources to give you more in-depth answers—about the investment choices that the financial services industry has created for you.

Whether you are considering mutual funds or ETFs (exchange-traded funds), whether you are wondering about annuities or options, whether you are considering futures or gold coins, you need ...