Eat Well, Sleep Well

Written By:
Paul Tracy
Updated August 5, 2020

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

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").

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.