Risk gets talked about a lot in investing, usually in extreme ways. In reality, risk isn’t something to fear or chase — it’s something to understand and manage.
What risk actually is
Risk is the chance that results differ from what you expect. That includes short-term ups and downs, not just permanent loss.
What risk is not
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It’s not the same as danger
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It’s not something you eliminate
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It’s not always bad
How risk works in investing:
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Higher potential growth usually comes with more ups and downs
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Lower volatility usually means slower growth
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Time helps smooth out short-term fluctuations
What reduces risk:
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Diversification (owning many investments)
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Time (staying invested long enough)
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Matching investments to your goals and timeline