Advantage of risk premium-invest in extremely risky

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Assignment:

1. Some questions I would like to ask everyone. Investments means you sacrifice the luxuries of today in order to have better standard of living and financial security in the future. Is it true to say so? Taking advantage of risk premium, invest in extremely risky investments only, will make us become rich? Or taking advantage of compounding returns from safer investments over a long period of time is a better decision for retirement plans?

2. The easiest way to save money is to pay yourself first. I have two piles of coins: Pile A has 4 quarters ($1.00) and Pile B has 3 quarters, a dime, and a nickel ($.90). Are these "basically" the same amount? Do you miss the other dime from Pile B? If you look at it and say not really, then take a dime out of every dollar you earn and put it away. This might be really easy.

Well, this "dime" represents 10% of your pay. If I suggest to put 10% of your pay away, most people would state "I can't live on what is left", etc., but when you look at it as a just a dime, then it is "easier" to save. Pay yourself the dime, before any other bills, etc.

Thought on that?

Reference no: EM133294988

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