High Risk vs Low Risk Investments Explained
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What is risk and why does it feel scary to new investors?
Hi, I'm Sophie. I'm one of the founders of The Curve, and I went from being in 50k of debt, not understanding investing, knowing how to budget, save. I was a total financial disaster. Now I have two investment properties, over 100k in the stock market, and I'm in no debt. But I did not always used to be this good with money and investing. And it all started from the very beginning of this podcast. We're currently on a podcast break. So we're having two weeks off new episodes. And we wanted to do some throwbacks to the vintage OG episodes that were released originally five years ago when I knew nothing about investing. If you don't need to go back to these throwback episodes, enjoy two weeks without us in your ears.
But if you know anyone who's felt left out of the conversation when it comes to money, investing, or just really don't know where to start, please send them this podcast. We will be back for regular programming at the start of October. Hello and welcome to another vintage episode. This is the fourth Raising the Curve episode that we ever released and this episode is talking about the fundamentals of risk, which you might be thinking, how boring can we not? But risk is just one of those words that you need to kind of understand but give a new meaning to. I don't know why I hate the word risk, but I've always hated it the entire time we've had this podcast. And I think it's because it's the very... word that sounds scary and misleading.
Because I bet if I'd said to anyone that now understands investing before they understood it, how risky do you want to be with your money? Everyone would say not risky. I don't want to be risky. Are you joking? I don't want to lose money. But you kind of have to take on a bit of risk to to hopefully get the upside, which is getting more money. That is like the essential principle when it comes to risk. You can leave your money in very safe places. You could pull out every single dollar, pound, everything you have to your name. You could hold it in a wallet and hide it under your bed. You could argue that's the safest thing that you could do with your money because it can't go anywhere. But I would actually argue that is the least safe thing that you could do with your money.
And that's only because now I understand risk. I understand that it's actually... so much riskier to not put your money in places that it can grow. I think until I saw brilliant returns because I was quote unquote risky with my money, I then started to feel so much more comfortable with what the idea of risk was. So When I finally got used to the idea of investing and I took the plunge, I'm quite a risky person generally. I mean, I would never jump off and do a bungee jump or probably ever jump out of a plane. But in terms of decisions I make with my career, with my personal life, with my money, I'm probably more risky than most people. But I think ultimately what everyone needs to understand, especially if you're new to
Risk is not scary. You can't multiply your money. You can't generate revenue. You can't grow what you already have if you don't take on a little bit of risk. So if you are storing all of your money away under the bed, in the mattress, in your wallet, somewhere where you can't lose any, you actually could lose it through inflation. And I know we've mentioned that before. I think in last week's episode, we briefly touched on inflation and what what it means and why it's actually quite risky to not invest your money because it basically means that as the cost of living gets more and more expensive and inflation gets more and more expensive by not investing your money and not keeping up with inflation that's I think so much riskier so
Yes, there's different levels of risk. And depending on how old you are and what types of things you want to invest in, it will change where you feel comfortable taking on more risk. For me, I'm 35. I was 30 when we first recorded this episode. I wish I could go back to my younger self and say, be risky immediately. Go and just like, don't freak out about this word risk.
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Chapters
8 chapters
1
What is risk and why does it feel scary to new investors?
0:00–4:15
2
How can you determine your personal risk appetite and what factors influence it?
4:15–8:16
3
Why is investing not the same as gambling and how does research change the equation?
8:16–11:32
4
What are the differences between low‑risk (e.g., term deposits) and high‑risk (e.g., equities) investments?
11:32–15:42
5
How does time horizon affect the level of risk you should take?
15:42–20:45
6
What is the impact of checking your portfolio too often on mental health and performance?
20:45–24:50
7
How can you calculate a realistic return goal (e.g., doubling money in five years) and the risk needed to achieve it?
24:50–28:31
8
Why is diversification essential and what basic steps can beginners take to diversify?
28:31–31:27
Speakers
3 identifiedMore from The Curve
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