Risk and reward
By ATB Financial 29 October 2018 less than a minute
High rates of return are associated with high rates of risk
If you want to earn a higher rate of return, you need to be prepared to accept the risk and fluctuation that comes with that. Choosing the right level of risk is about understanding yourself and your preferences as an investor.
The level of risk you choose will determine your potential return. Investments that offer a guaranteed return like GICs and short term deposits will be very predictable, but in the long term they may not grow enough to help you reach your goals.
Other investments like stocks are more volatile and uncertain, however they offer a greater opportunity for growth. If you are ok with the ups and downs, understanding that in the long term a few years of negative growth can be erased in a short period of time during market upswings, then you are willing to accept a higher level of risk. A financial advisor can help you understand what level of risk you are willing to take with your investments.