This issue looks at the challenge of understanding what risk means to an investor. We contrast short-term volatility with longer-term goal risk and use the long run (1926 -2023) US data for cash and equities to make the point. It may surprise some to know that cash suffered a 50% fall in purchasing power which took around seven decades to recoup! Mitigating these risks through owning a diversified pool of equities (by geography and style), asset classes such as REITs, and inflation linked bonds is part of the solution.
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