High Returns are Never Free

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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Some people make it seem that high returns are attainable as long as you put in the time and effort to managing your portfolio. 

But that's just one side of the picture.

The other side of the picture that is less often discussed is the high risk which high returns portfolios bring. 

It is impossible to achieve high returns with low risk. Regardless of how skilled an investor is, it is not possible that achieve maximum return with minimal risk. You can maximise your risk and return trade-off but if you want high returns, you cannot say that you want low risk. High returns come with high risk. 

There is no free lunch in this world.

People who say it's possible to achieve high returns with low risk do not realise that portfolios which deliver high returns often go through a lot of volatility, which equates to high risk.

A portfolio with high volatility is risky. It's impossible to have a volatile portfolio that isn't risky because volatility is risk. 

As such, when people are amazed at the high returns delivered by equities like the US market, particularly US stocks, they often do not realise the cost at which these returns come at. 

Rather the high returns delivered by the US market should viewed as a given rather than as an exception as some may view.

The US market is not delivering exceptional returns for no reason. It's delivering such high returns because the risk of investing in them (i.e., the volatility) is high.

Therefore it is a given that the US market should deliver high returns precisely because it is a risky and volatile market. 

Volatility is the price you pay for returns. In other words, high volatility is the price you pay for high returns.

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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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