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Glenda Moehlenpah, CPA, CFP®
Financial Bridges
13319 Poway Road, #506
Poway, CA 92064
Phone: 858-486-0100
Email: glenda@financialbridges.com
Website: www.FinancialBridges.com
May/June 2018
Risk is Relative
You may have heard the caution about investing according to your risk tolerance. But what is risk?
If you invest in stock or bond mutual funds, you run the risk of losing the money you invested. It’s as stark as that. Risk becomes relative, however, to the potential reward.
For example, the risk of losing your money is usually greatest where the potential to earn the most money is at its highest. Conversely, you may invest in a conservatively managed bond mutual fund that generally offers a low return. That’s because risk is low, and its potential reward is relative.
Do the Work
Risk tolerance often works hand in hand with time horizons, goals and the need for liquidity. You can learn your risk tolerance by working with an advisor.
You should consider the fund’s investment objectives, charges, expenses, and risks carefully before you invest. The fund’s prospectus, which can be obtained from your financial representative, contains this and other information about the fund. Read the prospectus carefully before you invest or send money. Shares, when redeemed, may be worth more or less than their original cost.
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