More risk equals more returns. This is another piece of common portfolio wisdom that we often hear from people. But is it true?
I’m not even sure it’s a half-truth, to be honest with you.
It’s really about taking the right risk because oftentimes more risk equals more losses, not necessarily more return.
Truthfully, the key to long-term investing is to avoid big losses. If you lose 30%, you have to make 43% to get back.
If you only lost 20%, you would be ahead with the lower return.
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