Final answer:
The relationship between risk and return in investing is complex. Stocks have historically provided high returns but also come with risks. The decision to invest safely or take risks depends on personal preferences and risk tolerance.
Step-by-step explanation:
The relationship between risk and return in investing is an important consideration for financial investors. From 1927 to 2012, the stock market experienced various ups and downs, resulting in different levels of risk and return.
During this period, stocks as a group provided a high rate of return over extended periods of time. However, this return came with the risk of significant market fluctuations. For example, in the 1970s and the first decade of the 2000s, the overall stock market return was quite modest. The stock market also experienced a sharp decline in 2008.
Ultimately, the decision to invest safely or take a risk and go for higher returns depends on personal preferences and risk tolerance. It is important for investors to consider their individual goals and carefully analyze the potential risks and returns of different investments.