Risk v. Reward

Risk v. Reward

If you desire high long-term returns, you must be willing to accept the high levels of volatility associated with the types of asset classes that produce such returns.

There is a wide spectrum of risk levels among asset classes. Risk is defined as fluctuations in returns from one period to the next.

Lower-risk investments, such as cash alternatives (for example, Treasury bills or certificates of deposit), have averaged modest long-term historical returns. Higher-risk investments, such as large, small, and international stocks, have averaged higher returns historically but with more volatility or fluctuations in value.

One of the first steps in developing an investment plan is to determine which is most important: return stability or long-term investment performance.

Government bonds and Treasury bills are guaranteed by the full faith and credit of the U.S. government as to the timely payment of principal and interest, while stocks and corporate bonds are not guaranteed. Certificates of deposit are insured and offer a fixed rate of return. Furthermore, small-company stocks are more volatile than large-company stocks, are subject to significant price fluctuations, business risks, and are thinly traded. International investments involve special risks such as fluctuations in currency, foreign taxation, economic and political risks, liquidity risks, and differences in accounting and financial standards.

It is important to understand that every type of investment vehicle carries risks. Diversifying your portfolio makes you less dependent on the performance of any single asset class.

Effective diversification requires combining assets that behave differently when held during changing economic or market conditions. Moreover, investing in assets that have dissimilar return behavior may insulate your portfolio from major downswings. 

Staff Profiles: Michael L. Dalton
Long-term Care Insurance


No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Sunday, 17 January 2021

By accepting you will be accessing a service provided by a third-party external to https://www.attentiveinv.com/

Due to renewed State orders for shelter-in-place we will be modifying our office operations. We will be suspending services at our physical office for the public. However, we are available to you via web meeting (zoom), email and telephone (Phone lines have been forwarded to our personal cell phones) during regular business hours. We will be able to fully service all your investment needs with no interruption.

You may drop contribution checks at our office through the mail slot or they may be mailed directly to TD Ameritrade (address listed below). Please be sure to notate your account number on the check.

TD Ameritrade
PO BOX 650567
Dallas, TX 75265-0567

Rest assured that we will continue to monitor your investments and market conditions on an ongoing basis with no interruption. Should you have any questions or concerns please feel free to contact us.

We will navigate this crisis as best we can, coming together and making shared sacrifices. We hope that we can help to slow down the effect of this virus together and solve this swiftly. We also wish everyone well and would like to extend our gratitude for your patience during these trying times. Continue to watch for updates from us.