Volatility vs. Returns

Disclaimer: Please note that all content and information in this blog are for educational and informational purposes only and should not be taken as professional investment advice.

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High volatility is necessary for high returns but does not guarantee high returns.

This is a fundamental aspect for investing that many misunderstand.

Many believe high returns can be earned without high risk. Any narrative which paints this picture is showing only one side of the coin. If investing is not without risks, what more investing for high returns. 

If you have high returns, it's either due to chance or skill, or oftentimes — both. But the common factor is that you took a necessary amount of risk to earn that return. Even if you didn't take much risk for that high return, in the long run, you will definitely need to take more risk to maintain or sustain that high level of return. 

A 30% annual return for example, doesn't happen magically with minimal risk. The investor took risk to earn the high return. While the risk may seem low or well-managed, the fact remains that the investor took the risk and was rewarded. 

When investing, it's equally important to pay attention to the risks as much as you pay attention to the returns. Focusing on the returns and forgoing the fact that your investment carries risk, is one for the riskiest things you can do when investing.

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Disclaimer:
The content and information provided on this blog is solely for educational and informational purposes, and should not be construed as financial advice. The accuracy or completeness of the content and information provided in the blog cannot be guaranteed. Before making any investment decisions, it is important for readers to research and carry out independent verification of the information provided, or consult with a qualified financial professional. No warranty and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of actions taken based on the ideas or information found in this blog.

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