RISK VS RETURNS

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Risk Vs Returns

When we measure and speak of Investment returns , we generally do not any make reference to the risk nature of that investments.

A 10 year Government bond’s returns are obtained without any default risk. But a higher return through a corporate FD, which is rated BBB , will come with the risk of one losing the capital.

Higher the risk, higher is the potential return and vice Verca.

Aiming for higher returns with downplaying the risks associated with it is not a great idea.

It’s important one understands his tolerance of risk, appetite for the same and his financial capability to undertake risk.

These three combined along with his life schedules will determine the kind of portfolio that would work for him.