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Posts Tagged ‘no gain’

Unfortunately, for many people, the word risk, just like the word budgeting, has a negative connotation. “Why would I want to risk my hard-earned money?”you say. “I’m very conservative.”
The answer: If you take no risks with your assets, you will be unlikely to earn
a return high enough to achieve your financial goals. To alter the universal sayingseen in gymnasiums everywhere—“No pain, no gain”—when you get into the money world, the saying is “No risk, no return.”

Now, we’re not advocating that you take enormous risks with all of your money. Not every risky investment will earn a high return; if it did, it wouldn’t be risky. By diversifying your assets carefully among high-risk, medium-risk, and low-risk investments, you are assured of ending up with a larger pool of assets over time than if you keep all of your money in low-risk, low-return choices.In general, the further in the future a return is expected, the greater the risk. Because it is tricky enough to predict what is going to happen over the next few months, it is even more difficult to know what the long-term future holds. Therefore, under normal circumstances, the longer you commit yourself to an investment, the more risk you are taking. But because you are taking more risk, you should be compensated in the long run by a higher return.