Understanding the Balance Between Risk and Return
Understanding the Balancing Between Risk and Return
Certain asset classes have the potential to deliver a great return/profit over a number of years; however the same asset classes also have the potential volatile returns over the short term, depending on how the asset classes respond to what is going on in the economy at any given time. So the high risk asset classes like equity’s are investments that you would ideally like to invest in over a longer period of time.
On the other hand you can also get certain asset classes that are less risky, but the no risk no reward phrase comes into the equation on these asset classes, as the returns are much lower. A typical asset class that will fall into this bracket would be cash/money market.
There is no wrong or right option above, however you must tie up your investment, goals and time horizon with the appropriate risk to maximize the potential of achieving your investment goal.
All Video Clips and Pictures supplied by Allan Gray
July 18, 2014
Grant van Zyl