Risk is not volatility. Understand the difference for better investment results
Market volatility is a given. It is more important, for example, to understand one’s capacity for risk and the right kind of investments to go for
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“CASH is king” has been the mantra ever since interest rates moved past 3 to 4 per cent. That sentiment has persisted in an environment of sustained, higher-for-longer interest rates.
However, if we examine more closely the historical track record, we will see that this is just a normal interest rate cycle. When inflation falls, growth falters, and rates will fall with it. We should be prepared for possible future scenarios.
Reflecting on what the historical data teaches us is what we refer to as the “science of wealth”, because knowledge is king, not cash. Knowledge about financial market history or behavioural finance, enables us to make better decisions that will result in better outcomes.
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