Is Investing Risky? Absolutely.
Trying to invest without exposing yourself to risk may be the greatest risk of all.
If you consider the long term threat of inflation, not investing your money properly can be just as risky as not investing it at all. It is not to say that everyone should put their money in an aggressive portfolio and throw caution to the wind, but all too often, people are unwilling to take the quantifiable amount of risk they need to take in order to see their goals met. Some investments see less volatility, but do not have high enough returns to beat inflation over time.
This growth of wealth graph shows us that one dollar invested in small cap stocks in 1926 would be worth more than $18,000 today.
Of course, if we look at individual indices representing different areas of the financial markets, we can see that not all investments are the same. Some investments see less downside during market corrections, but do not have the power to make up for inflation over time. Some investments have a higher short term risks, but prove beneficial in creating wealth over longer periods.
We prefer to think of risk as something that is necessary and should be something not feared, but used as an opportunity to create wealth for our clients.
To learn more on science-based investment strategies, contact Private Wealth Management Group.