Basic concept of Risks vs. Returns

Just For Thinking ....

Once we fully understand the basic concept of Risks vs. Returns and develop common sense in finance and investment matters we will not become victim of greed.

1. Low risk and low return

When the risk is low, the return is expected to be low.

2. Low risk and high return

Red alert! This is highly not possible in a free market environment. Don't ever let the Greed overcome you and become foolish. A fool and his money will soon part.

3. High risk and low return

Warning! Many of those financial instruments that are highly leverages are actually high risk and low return when you are lacking in knowledge and skills in executing these financial instruments by yourself and depending on your financial advisers to complete them for you. Your financial advisers will be eating into most of your returns and leaving you with high risk and low return after expenses and management fees.

4. High risk and high return

Be extra careful! Not necessary true so you have to be extra careful and seriously do your homework. You must have the financial strength, knowledge and skills to earn this type of high returns. Average investors are advised to stay away as these financial instruments may not be your cup of tea.

Conclusion

Get educated. Trained yourself to be more knowledgeable and skillful. Build up your financial strength so that one day high risk and high return may become your cup of tea.