Risk and reward are closely linked from "summary" of PSYCHOLOGY OF MONEY. by MORGAN. HOUSEL
When it comes to investing, the relationship between risk and reward is fundamental. Investing always involves some level of risk. The more risk you take on, the higher the potential reward. This is a basic principle of investing that has stood the test of time. Understanding this relationship is crucial for making informed investment decisions. Investors need to assess their risk tolerance and weigh it against the potential rewards they could receive. It's a delicate balance that requires careful consideration. Risk and reward are not independent of each other. They are intertwined, with higher levels of risk typically associated with higher potential rewards. This is why investors who are willing to take on more risk often have the potential to earn higher returns. However, it's important to remember that high risk also comes with the potential for high losses. Investing is never a sure thing, and there is always the possibility of losing money. This is why it's important for investors to diversify their portfolios and not put all their eggs in one basket.- The relationship between risk and reward is a key part of the investing process. Investors need to understand this relationship and carefully consider their risk tolerance before making any investment decisions. By doing so, they can set themselves up for success in the long run.
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