Balance of Risk and Return

Last update - 8 August 2023 By James Woods

As market dynamics fluctuate, so too does price volatility, heightening the possibility of large returns or losses. The higher the potential for reward, the greater the risk assumed and vice versa.

When making investment decisions, an investor must always consider both risk and reward. It is crucial to acknowledge that each investor’s appetite for risk is unique, influenced by their financial goals, timelines, and tolerances. While the potential for significant returns can be tempting, investors need to measure it against their personal tolerance for potential downturns, ensuring that decisions made are both informed and aligned with one’s broader financial strategy.

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