The three types of risks
Marks goes further, highlighting another two risks. The second approach is to take a moderate level of risk and accept a modest return for it....Some of us can be risk averse. And for good reason.
Perhaps you do not want to lose your hard-earned money, especially if that money might be needed for your child’s education or your retirement.
However, when it comes to your spare cash, veteran investor Howard Marks makes a good point.
For the uninitiated, Marks is the co-chairman of Oaktree Capital Management, a hedge fund specialising in alternative investments with assets under management of US$189 billion.
His latest memo highlighted a key point many do not talk about: the “risk of not taking a risk”.
In essence, you can play it safe by avoiding risks and parking your money in the bank.
However, by doing so, you will get little to no returns.
Your money will be eroded by inflation too.
