For now, let me say that risk exists at three levels. First, you fail to achieve the return you planned on to reach an objective. Finally, you lose so much that family security is jeopardized. You probably have to change objectives and significantly modify lifestyles. Few, if any, objectives justify risking family security, unless you hear it clearly from our Lord.
Time is the third variable to be balanced with risk and return.
We call this liquidity and because you give it up on a five-year CD, institutions pay more to compensate for this risk. We will look at balancing these factors in the next three articles. Time can also reduce risk in the case of mutual fund or stock holding. In fact, time, combined with interest, presents us with both the best and the worst scenarios. It can work for you, producing spectacular results on your investments, or against you, costing you dearly on your debt.