This week David talks about the importance of understanding why much of the prevalent mindset of achieving retirements savings objectives is often synonymous with taking on more risk.
Risk can be defined as exposure to loss. Synonyms for risk in include: To Endanger, Jeopardize, to gamble with, to take chances, to put on the line, to put in jeopardy.
The greatest definition of Risk is the likelihood of loss. Most people mistakenly associate risk (related to their retirement savings) with the probability that they will “hit it out of the park” or “win big” by experiencing higher rates of return. The true definition of risk is the likelihood of loss. Let’s think through this logic for a moment…. You have to take on more chance of losing everything, so you can get more money and get ahead? Logically does this make sense? Yet, this is sold to the American public by way most “Financial Advisers” promoting common strategies propagated by Wall Street. Listen to David explain the real problem behind why many individuals fail to meet their long-term financial objectives. The answer is not found in chasing higher rates of return and subsequently taking on more risk of loss. The answer, is more simple than you think.
Be sure and watch the accompanying videos below. David validates these ideas with math. Be sure to enlarge the video to fit your entire screen.