High Risk vs. Low Risk questions

[Paul24]

Just some really general questions about high risk vs low risk and the definition of it.
By low risk we are talking about something that the return from it is pretty low but at the same time its safe, probably wont fall out of the sky in any normal economic situation.

But high has has the potential to fluctuate wildly, so would high risk investments be more speculative shares. If you were planning to hold for a long time say 10+ years, would high risk be better because you can always ride out the lows. Or by high risk does it mean theres more chance that you could lose big time and the shares never recover?

 

[So_Cynical]

Re: High Risk vs Low Risk questions

Better to look at risk as a sliding scale 1 to 10 say, hang around this forum long enough and you'll soon find out that people have all sorts of personal levels of risk assessment and tolerance....risk comes in all sorts of shapes and sizes, financial risk (debt), political risk, single asset risk, technology change risk, currency risk, litigation risk and the list goes on.

Its up to you to determine risk and what's acceptable to you.

 

[skc]

Just some really general questions about high risk vs low risk and the definition of it.
By low risk we are talking about something that the return from it is pretty low but at the same time its safe, probably wont fall out of the sky in any normal economic situation.

But high has has the potential to fluctuate wildly, so would high risk investments be more speculative shares. If you were planning to hold for a long time say 10+ years, would high risk be better because you can always ride out the lows. Or by high risk does it mean theres more chance that you could lose big time and the shares never recover?

Long time doesn't reduce risk. Many shares fall and never recover, or they go bankrupt, or they fall very low and get taken over at well below your buy price.

High risk can be somewhat mitigated by diversification. You take 10 speculative stocks, 5 of them go busts, 4's gone nowhere and 1 is a star, you will come out ahead. But you could just as easily get 10 busts...

Good luck.