It’s Your Money: Risk vs. Reward

Regardless of how comfortable or uncomfortable it makes you feel, risk is a major part of investing. It's not all bad though - risk can also give you the opportunity to make more money on your investments than you would in guaranteed investments. Having a strategy to manage risk, especially by diversifying your investments, is one of the most important things you can do to achieve your financial goals.

Your risk management strategy will change with time as your life situation and financial situation changes. You might be a big risk taker now, but when you have other people depending on you for their needs, you might become more conservative. It's important to adjust your investments on a regular basis as your goals and needs change, and in response to how well your investments are doing. All investors make good and bad investments, but as a young person, you'll have lots of time to ride out any rough stretches.

In the end, you are the only person that can ultimately decide the best balance of risk and reward. In order to help you determine that comfort level a little better, let's look a little closer at some more investment options in the next few topics.