 |
Definition of 'Risk-Return Tradeoff'
The principle that potential return rises with an increase in risk. Low levels of uncertainty (low risk) are associated with low potential returns, whereas high levels of uncertainty (high risk) are associated with high potential returns. According to the risk-return tradeoff, invested money can render higher profits only if it is subject to the possibility of being lost.
|
 |
Investopedia explains 'Risk-Return Tradeoff'
Because of the risk-return tradeoff, you must be aware of your personal risk tolerance when choosing investments for your portfolio. Taking on some risk is the price of achieving returns; therefore, if you want to make money, you can't cut out all risk. The goal instead is to find an appropriate balance - one that generates some profit, but still allows you to sleep at night.
|
-
The level of risk you take on is positively correlated to your potential returns. Read more here.
Read More »
-
Many investors do not understand how to determine the level of risk their individual portfolios should bear.
Read More »
-
See why investors today still follow this old set of principles that reduce risk and increase returns through diversification.
Read More »
-
-
CAPM helps you determine what return you deserve for putting your money at risk.
Read More »
-
Find out your acceptable level of risk versus reward.
Read More »
-
Starting to invest can be a scary process. Luckily, steering clear of common errors is half the battle.
Read More »
-
Why have stocks historically produced higher returns than bonds? It's all a matter of risk.
Read More »
-
At times of market stress, investors flee from risky assets to investments the safest ones available.
Read More »
-
Minimizing risk while maximizing return is any investor's prime goal. The right mix of securities is the key to achieving it.
Read More »
|
|
