Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Eat Well, Sleep Well

What it is:

The phrase "eat well, sleep well" refers to the risk-return trade-off that most investors must make.

How it works (Example):

When investors decide which securities to buy, they also make a decision about the risk they are willing to bear. Buying high-risk securities offers the possibility of earning high returns and big profits ("eating well"), but buying low-risk securities offers the possibility of earning reliable returns ("sleeping well").

Why it Matters:

The risk-return trade-off is one of the most fundamental decisions an investor must make. Through diversification and a variety of investing strategies, most investors try to eat well and sleep well -- but few succeed.
 

Related Terms View All
  • Auction Market
    Though most of the trading is done via computer, auction markets can also be operated via...
  • Best Execution
    Let's assume you place an order to buy 100 shares of Company XYZ stock. The current quote...
  • Book-Entry Savings Bond
    Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to...
  • Break-Even Point
    The basic idea behind break-even point is to calculate the point at which revenues begin...
  • Calendar Year
    If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December...