We pay greater attention to stability and risk because investing is a psychologically painful endeavour. One must be able to endure significant temporary losses in order to emerge a winner. During the depth of the 2008-2009 recessions, my personal portfolio was down over 50%. If I has sold out my holdings then instead of holding on and waiting for the eventual recovery, I would not be a millionaire today.
Next, getting some dividends trickling into their bank accounts also act a source of motivation to stay invested in the markets....In every Early Retirement Masterclass, students will create two portfolios, a blue-chip portfolio and a dividend income portfolio.
The objective of teaching students how to build a starting portfolio is not to beat professional fund managers but to decrease portfolio volatility and risk. We want to lose as little money as possible and we want stability in our portfolios.
