Retire With Purpose - The Retirement Podcast

474: The Reality of Investment Risk: Why Low Probability of Loss Doesn't Equal Low Risk

8 snips
Dec 20, 2024
Dive into the true meaning of investment risk and why low probabilities of loss don't necessarily indicate safety. Discover how statistical anomalies must be integrated into smart investment strategies. Explore the importance of risk mitigation and learn how effective management can lead to greater returns. Assess the value of steady investment practices over flashy successes to build wealth gradually. Real estate investment insights offer a realistic view on costs and preparations for market downturns.
Ask episode
AI Snips
Chapters
Books
Transcript
Episode notes
INSIGHT

Probability vs. Frequency

  • Low probability events can still occur frequently.
  • Consider the frequency of unlikely events like hole-in-ones.
ANECDOTE

Hole-in-One

  • Casey Weade, a skilled golfer, has never had a hole-in-one.
  • Marshall Johnson and Casey's grandmother-in-law, less skilled golfers, have had multiple hole-in-ones.
INSIGHT

Defining Investment Risk

  • Investment risk is not just about the odds of winning or losing.
  • True risk lies in the severity of potential permanent losses.
Get the Snipd Podcast app to discover more snips from this episode
Get the app