Guaranteed Vs. Risky Investments | Personal Finance & Lifestyle | Yakezie Forums

Would you rather have a lower,  but guaranteed interest rate (say 3-6 percent growth), or would you rather have the potential for growth with the risk of loss (-15 – +15)?

Personally, I have a low stomach for risk. I understand more risk means more potential gain, but I'd prefer the guaranteed return myself.

Not enough info given.

What is the expected rate of return in the latter case? You're promising 3-6% growth in one case and promising the potential to go up or down 15%. Looking across a one year timeframe the stock market could, in the extreme go up ca. 60% or down as much as 50% (based on history). But the expected annual return based on historical averages is 8-9%.

Given a long enough timeframe, I'd gladly take expectation of 8-9% returns while risking extreme short-term fluctuations — even more extreme than your +/- 15% scenario.

Back to your question… Is there an equal likelihood of +/- 15% (in which case we might expect returns to average 0%)? Or something else?