Final answer:
U.S. stocks, as well as stocks from other countries, tend to become less risky over longer holding periods due to market fluctuations evening out over time. Risk and return considerations are crucial when choosing investment options, and mutual funds are often recommended for young investors due to their cost-efficiency and ability to invest over a long term.
Step-by-step explanation:
Have U.S. stocks become less risky over longer holding periods, and what about other countries? This is a question that taps into the concepts of risk and return in the stock market. Historically, stocks have demonstrated that they tend to offer high average returns over long-term investment horizons. This is because while stocks are quite volatile in the short term, their ups and downs can even out over an extended period.
People can purchase stocks from financial markets, and it is usually advisable to diversify your portfolio to spread out risk. Different investment vehicles, such as bank accounts, bonds, and stocks offer varying degrees of risk and return. Young investors are often encouraged to invest in mutual funds, which due to their size, can reduce transaction costs and more efficiently absorb short-term market volatility.
Furthermore, as short-term risks in equities can dampen with time, long-term investing can indeed reduce the overall risk profile of U.S. stocks. This principle generally applies to other countries as well, though the magnitude of risk reduction over time can be influenced by country-specific economic and regulatory factors.