THE MORE THE RISK, THE MORE THE POTENTIAL RETURN

Successfully managing the risk-return tradeoff is the goal of most investors. Financial experts have developed a variety of measures, such as beta, standard deviation, and covariance, to assess the risks of specific investments. Diversification is a means of varying the kinds of assets you invest in to maximize returns while minimizing risks. Depending on their risk tolerance, investors might choose to pursue such low-risk strategies as buy and hold or dollar cost averaging, or take the higher risks of market timing strategies as they seek higher short-term returns on their investments.

If you are interested in exploring this topic beyond the overview provided here, please see related tutorials.