I started serious Investing Journey in Jan 2000 to create wealth through long-term investing and short-term trading; but as from April 2013 my Journey in Investing has changed to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

It is 57% (2017 to Aug 2022) to the Land of Investing Nirvana - Freehold Income for Life!


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Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

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Value Investing
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Saturday 28 August 2010

Risk-Reward Concept

This is a general concept related to risk and reward. When you take risk, you expect reward. In theory, when the risk is higher, you will expect more reward in order to invest; but for lower risk, you can accept lower reward.

Most investors can easily understand and can accept that the concept of a low risk and high return does not exist in the real world of investing. If such rare opportunity does happen,  investors will quickly chase the investment and cause its yield to fall.

But when it comes to investing in the stock market, some investors may choose to ignore or  blind to the general acceptance of risk-reward concept. They can believe that high yield low risk does exist in the real world of open and easily accessible markets. They may not believe that high yield may be an indication of high risk and tend to believe that the open market is wrong. Yes, mispricing can happen in a panic market but when the calm is restored the market is seldom wrong for long.

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