Risk, Returns and Costs are the Three Brothers of the Investing World
Jul 14, 2018 by Amit Kumar
The Three Things that Matter
Risk, returns and costs are the three brothers of the investing world.
The middle brother, returns, is the most loved. Investors want returns and advisors want to talk about potential returns. The very act of investing is driven by the love of returns.
Risk is a neglected brother. The care and nurturing of risk is often farmed out to compliance people. The only attention risk gets, is from statements like ‘investing involves risk and the value of your investment can go down as well as up.’ Risk is sometimes hidden from sight in the small print under terms and conditions.
And the less said about costs the better. In some investment products like mutual funds, these are quite clearly known. In others, like structured products and insurance deciphering costs requires more effort.
If there are three brothers in a family, all of them should be loved equally and get the same attention.
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