Bellmore Group Management Services, Tokyo Japan 3 Risks of Investing in the Stock Market | Page 4

market downturns. If you tend to borrow to invest (to pay for your lifestyle), you would do well to
remember the advice of popular financial gurus such as Dave Ramsey, who warns, “Debt is dumb. Cash
is king.” Or Warren Buffett, who claims, “I’ve seen more people fail because of liquor and leverage –
leverage being borrowed money. You really don’t need leverage in this world much. If you’re smart,
you’re going to make a lot of money without borrowing.”
Final Word
“It’s not what you make, it’s what you keep that matters.” The source of this widely recognized quote is
uncertain, but it can be found in almost every list of famous quotes about the stock market. The saying
illustrates the need to reduce risk as much as possible when investing. Achieving significant stock market gains,
only to lose them when a disastrous event occurs, is devastating – and often unnecessary.
Robert Arnott, founder of the Research Affiliates asset management firm, identified the dilemma in the
relationship between risk and return: “In investing, what is comfortable is rarely profitable.” By employing
some of these strategies, such as dollar-cost averaging, reducing portfolio volatility, and diversification, you can
protect your wealth and sleep better at night.
Are you concerned about the risks in the stock market? What steps do you take to reduce your exposure to
negative events?