In particular, investors often underestimate or ignore the devastation that inflation can cause on a fixed income. Inflation is like a slow-growing cancer. At first you may not notice it, but eventually it will kill you. Each risk can be mitigated and managed using well-defined techniques. The trick is to manage your portfolio to achieve the maximum level of return at any level of risk you are willing to accept, achieve your goals with the least risk possible, and develop a strategy that has the highest possible probability of success.
Most investors are risk-averse.
You can take lots more risk than what we advocate here. But our discussion is intended for the vast majority of Americans looking for a sensible college fund, retirement plan, or general wealth accumulation strategy. We will confine ourselves to the traditional liquid markets, and avoid more risky speculations. We have seen how leverage magnifies risk. Most speculators are rather quickly wiped out.