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.

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Paul Tracy
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Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

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