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.