Investing to Wealth

Before comparing or considering investments, it is better to perform a risk-adjusted return calculation that will adjust the returns according to how risky the investments are. The riskier they are, the more the returns are lowered before any comparison. Technically risk refers to mean volatility, which measures returns vary a given period of over time. An investment or a portfolio that grows steadily has low risk, and another investment whose value jumps up and down unpredictably has high risk.