Question: What is the Role of Risk in Investing?
Answer: Risk is part of investing. It is the price you pay for a potential reward. The greater the risk, the greater the potential reward should be.
Every investor needs to find the level of risk that is comfortable, but is enough of a reach to achieve their goals.
Investors need to correctly identify the risk of a particular stock so they can determine if the potential reward is worth the chance of loss.
Without any risk, investments often return very little. So the trade off is safety and low return or risk and potentially higher returns.
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