6 min read
Risk vs Return
Higher expected return is almost always purchased with higher uncertainty — including the chance of losing principal.
Risk, in investing, is the possibility that the outcome differs from what you hoped — including permanent loss of capital, delayed access to your money, or returns that fail to keep pace with inflation.
Return is the compensation you may receive for taking that risk. There is no honest product that offers high return, high liquidity and low risk at once.
Cash feels safe and slowly loses purchasing power. Equities can grow wealth and can fall 30% in a year. Bonds sit in between, unless credit or interest-rate risk says otherwise.
A cohort does not chase the highest advertised yield. Participants should know what they own, why it can lose money, and how long they can leave it invested.
Past performance is not a forecast. A quiet six months in a demo portfolio is not evidence that risk has been removed.