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Saving, Managing Debt, and Budgeting

Risk / Reward

How do professional investors feel about risk?

Many professional investors believe the mitigation of risk is probably as important as analyzing and making specific investments. Over time, investors are rewarded with higher returns in exchange for putting their money at higher risk. But many professional managers believe you can mitigate risk by buying and holding various assets over time, and selecting assets with minimal correlation, so that if any one asset decreases in value, others may increase in value or be unperturbed by the cause of the decline. By diversifying your portfolio with uncorrelated assets, you may be able to experience increases in the values of your portfolio without having to deal with sharp declines.



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