Yield is a more useful figure as it can be used to compare among investment alternatives. Your Investment Philosophy A. Understanding Risk - 1. Risk represents the uncertainty that the yield on an investment will differ from what is expected.
Risk is what sets investing apart from saving.
Savings in depository institutions is virtually risk free as accounts are insured and the interest earned is very sure and consistently paid. Investments have more risk as accounts are not usually insured and yields can fluctuate. The yield on savings barely keep up with inflation and taxes. To obtain higher returns one must accept more risk. B. Three basic investment philosophies - 1.