Page 42

One provides the brawn while the other provides the brain, and together they strive to climb the ladder of success. If all goes well they both profit, otherwise the investor must bear the financial losses. Since an investor stands a chance to lose some or all of her capital investment if things do not go as planned, we can conclude that when she realizes a profit on her investment, she is rewarded for the risk taken. Yes, the risk/reward ratio again. The higher the investment risk, the higher the potential return, and of course the higher the potential for loss, while on the other hand, the lower the risk the lower the potential for gain or loss.

If you think that the investor’s work is limited to putting up his own money, think again. A diligent and alert investor must spend a great deal of time sifting through all sorts of information to research a possible investment candidate. And once the investment has been made the investor must stay abreast of numerous factors affecting the investment in order to maximize his gains and minimize his losses. Of course the investor can pay a professional (e.g., a stockbroker) to do all the research and the ongoing data gathering and interpretation on a particular investment. In any case, the prudent investor spends a sizeable amount of time, money, or both to determine the value of an investment before taking the plunge, proving that there are no free lunches and wise investing comes with a price tag.

And what about the careless investor? While there are plenty of cases where quick profits have been made by reckless investors, there are plenty more where investors have lost everything. And most of those who have made profits end up losing their gains and then some. Easy come, easy go!

Today, there are a limitless assortment of investment options available to choose from. They range from ultra-safe to virtually sure …