Understanding risk and return in simple terms

A friend called me around midnight a few nights ago. Travelling alone in a cab, she informed me that her mobile data was down, so she couldn't share her location. Exhausted, she was on the verge of falling asleep - her parents thought she was at my house, but she was still an hour away. To keep her awake, I made small talk about finance. The irony isn't lost on me, don't worry. 'You earn so much, why don't you invest the money you save?' I asked. 'Dude, it's too risky.' I hope the irony isn't lost on you either. This isn't just one instance. Gripped by the fear of risk, many of us avoid investing to not lose money. Yet, somehow we overlook the certainty of inflation eroding the value of our savings. The 2022 DSP Winvestor Pulse Report found that among its participants, 67 per cent of women consulted their spouse for investment decisions and only 26 per cent invested independently. Prioritising safety and stability, women showed a preference towards bank fixed deposits. The biggest hurdle toward independent investing was quoted as a lack of confidence in financial knowledge. Risk and returns aren't the villains they're made out to be. Understanding them is the first step to investing with confidence. Let's clear the misconceptions - because smart investing isn't about avoiding risk, it's about managing it. The relationship between risk, return, and time Risk is everywhere but we manage it daily. Travelling alone at night? Risky. Ordering sushi from a new restaurant? Risky. Wearing white while eati

This article was originally published on March 06, 2025.