financial concept that, I think, is the most poorly understood, and therefore contributes the most to poor financial decisions? Risk.
Are you scared of putting your superannuation into a ‘high-growth’ portfolio, even though you’re in your 20s or 30s, and you have decades to ride out any market movements before you’re eligible to access your superannuation? Most people talk about risk in a very black-and-white way. Something is either risky, or it’s not. Shares are risky and real estate is not. Starting a business is risky and a job is not.
In contrast, the share market has other risks associated with it. If you buy shares in a specific company, you’re buying into all the risks that impact the viability of that business. There could be risks associated with the platform or service you choose to buy investments through .has risks associated with it. There is no risk-free option.
The great news is, like most fears once you face them, it’s usually not as bad as you thought it would be because you realise that there’s a lot you canFor example, you can reduce the risks associated with buying the shares of a single company by investing in anor index fund which gives you exposure to a broad variety of companies .