If there's one "rule of thumb" that every investor should know, it's that there is a distinct correlation between risk and reward. The greater the potential reward for an investment, the higher the risk. Conversely, lower-risk investments tend to produce lower rates of return.
This is something that many investors often forget -- especially those who are new to the game. If you pay attention only to a particular investment's prior performance without looking at the potential risks involved, you may be in for a really unpleasant surprise down the road.
Purchasing investments based solely on their rate of return is what's known as "chasing yield," and it's a mistake that can and should be avoided. Find out more from host Johnny Dean and our advisor, Rick "The Professor" Plum, CFP® on this week's episode of Managing Your Financial Future!
