Trade off between risk and return?Financial Planning
In the past, there was a sense of sanity governing global financial markets. Now, each morning brings apprehension about the direction of the markets. If people tend to follow the masses, they soon find that market trends not only influence their moods but their account balances as well. When you see a steady upward move in your portfolio balance you feel secure. It is a confirmation of your investment strategy; you feel safe and assured. However, when unforeseen world events occur; companies miss their earnings forecasts. The economic and political climate turns negative. The feeling of security can suddenly transform into fear and panic. People tend to be risk averse yet enjoy making investment gains. A balance must be struck. It is hard to see losses and even harder to realize a loss even in the name of protecting capital before more damage is done. By managing risk effectively there will be times that you will underperform the broader market while outperforming longer term with less volatility. The long term profits are all that matters and not the results of a few buys and sells. It is hard sometimes to accept the short term discipline necessary to be successful in the long term. It is not what you make, it is what you keep.
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Almost perfectilly cooreletad ( More Risk = More Return) ( Less Risk = Less Return) like the law of gravity in a sense.