Reduce Your Investment Risk (For Little To No Cost)
Investing is risky. That’s the price you pay in exchange for higher returns.
If you wanted zero risk you’d put your money in high interest savings account. But then your returns wouldn’t even keep up with inflation. Over the long run, a no risk investment is essentially losing money because its worth less and less each year.
Buying bonds offer a slightly higher return, usually above inflation, but that comes with additional risk. Bond prices are sensitive to interest rates and the economy. There is also the risk of default.
Equities provide an even higher return. This is exchange for much higher risk.
So how do you go about reducing your risk for little to no cost? First let’s discuss exactly what we mean by risk.