Personal Investing Part 1 – Goals, Risk vs Return, and Diversification

This video covers the following learning objectives:

1️⃣ Explain how personal financial goals affect investment decisions

• How time horizon, liquidity needs, risk tolerance, and return requirements influence which investments are appropriate for different financial goals.

2️⃣ Describe the relationship between risk and return

• How different investments carry different levels of risk and expected return.

• The risk-return tradeoff: higher potential returns are associated with higher risk.

• Examples of investment types across the risk spectrum.

3️⃣ Discuss how diversification reduces risk

• The concept of diversification across asset classes, industries, and geographies.

• How diversification reduces unsystematic (company-specific) risk.

• The role of diversification in stabilizing portfolio returns.