Saving, Managing Debt, and Budgeting

Risk / Reward

What is the progression of risk, from low to high, among different classes of investments?

Normally, each type or class of investment carries its own reward and risk associated with the investment that may be plotted on a graph. Moving from low potential return/low risk to high potential return/high risk, there are short-term government debts (from financially secure sovereign nations); mid- to long-term government debts, shortterm loans to the highest rated blue chip corporations; real property that is purchased and then rented or leased; high-yield debt to less stable governments and lower-rated corporations (junk bonds); equities (including small, medium and large capitalized corporate equities); and options and futures contracts (wherein you leverage or borrow funds in order to purchase an investment).



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