The debate between playing it safe and taking calculated risks continues in the world of investments. But
can you afford to be overly conservative over the long term, or is there value in embracing calculated
risks?
The Appeal of Conservative Investments
Opting for safe investments like bonds, cash and term deposits, provides a sense of security, especially
during times of economic uncertainties. However, the low returns in today’s environment and limited
growth potential pose challenges for long-term wealth accumulation.
The Dangers of Playing It Safe
While conservative investments offer stability, they might not keep pace with inflation, potentially
eroding your wealth. Being too conservative can restrict your portfolio’s growth potential, and limit your
ability to meet long-term financial goals.
Calculated Risks
Embracing calculated risks involves strategic decision making based on research and risk tolerance.
Allocating a portion of your portfolio to stocks and real estate can offer higher returns and diversify your
investment strategy.
Diversification
Trying to pick that one magical stock that will make you rich is a tempting idea, but it’s really hard to
predict which stock will be a winner. If you make the wrong choice, you could end up losing everything.
Despite the risks in investing, we can reduce risk by spreading investments across various companies
and industries rather than concentrating on a single stock. This is called “diversification.” It might not
give you the thrill of hitting the jackpot with one stock, but it helps protect your money by reducing the
risk of a big loss.
The key to successful long-term investing may lie in finding the right balance between conservative
choices and calculated risks. Understanding your financial goals, conducting research, and diversifying your portfolio will maximise your ability to meet long-term financial goals.
Should you require further information in relation to investing, please feel free to contact Peter Quinn
by submitting an enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.
The information in this document does not take into account your personal objectives, financial situation or needsand so you should consider its appropriateness having regard to these factors before acting on it. It is importantthat your personal circumstances are taken into account before making any financial decision and it isrecommended that you seek assistance from your financial adviser.