Many people believe common misconceptions about managing their money. Here's what you need to know to improve your personal finances.
It can be difficult to comprehend risk, but getting a grasp on it is critical to making good decisions.gauges an individual's knowledge of their personal finance s. The index, which has been conducted annually since 2017, asks respondents questions about borrowing, saving, earning, investing and other money-related areas.
Many mutual funds and exchange-traded funds — especially ones that track a broad market index like the S&P 500 — hedge this risk through diversification, by buying the stock of many different companies. FACT: The U.S. stock market is considered to offer the highest investment returns over time, but there is a higher risk as stocks are more volatile than bond prices or cash in a savings account."An asset that brings a higher return also has a higher expected risk," said Lusardi, who is also a member of the"People feel like, I can get a higher return with no risk … but basically, a higher return is always a reward for higher risk.
Preston D. Cherry CFP Business News
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