Skip to Main Content

Start Of Main Content

Invest smart: Learn the ropes right here

Learn the difference between low- and high-risk investing, and how to choose the strategy for you.

Chapter 3: Investment risk vs. reward

Not all investments are the same. With a little preparation, you'll get a better understanding and appreciation of how much to invest and where. 

Download the Just the Facts: Investing worksheet to help you figure out the risks and rewards of investing.

03-04-2019

Video Transcript

Risk and reward

Higher-risk investments typically offer the possibility of larger rewards. Less risky investments are generally more stable and less likely to bring a larger reward.

A great way to gauge how you should invest is to figure out your investment risk tolerance (i.e. How much risk are you willing to take?). Everyone's risk tolerance is different. One factor to consider is time. If you are looking for a short term return in your investment, you might consider less risky investments. When you have more time to wait on the results of what you have invested, you might carefully consider more risky investments.

When it comes to investments and risk, what will work for one person, might not work for the next. However you decide to invest, compare investment risks by doing diligent research on your options before actually investing. For more information about investing and risk, you can visit the U.S. Securities and Exchange Commission website.

Also, check out the video for more details on risk tolerance as well as the risks and rewards of investing.

Your chapter 3 checklist

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.

Securities are not FDIC insured, are not bank guaranteed and are subject to investment risk, including possible loss of principal.

Neither State Farm nor its agents provide tax or legal advice.

Securities distributed by State Farm VP Management Corp.

Diversification does not assure a profit or protect against loss.

AP2021/02/0209



Also Important

Series on Reaching Your Financial Goals

Series on Reaching Your Financial Goals

Have you been putting off budgeting for far too long? Financial experts at State Farm serve up some engaging insights on reaching financial goals.

Future Value Retirement Savings Calculator

Future Value Retirement Savings Calculator

This calculator can help you determine how much savings you will have for retirement based on what you have now and will add in the future.

Related Articles

Recognize IRS Scams to Better Protect Yourself

Recognize IRS Scams to Better Protect Yourself

Common tax scams like telephone scams, phony tax preparers & phishing emails/websites can cost you plenty. Read more from State Farm to help stay safe.

Figure Out Your Investing Risk Tolerance

Figure Out Your Investing Risk Tolerance

Learn how your current stage of life and appetite for risk play an important role in determining the optimal investment strategy.

Financial Foundation for Freelancers

Financial Foundation for Freelancers

Get some great tips on financial goals and budgeting to help you get better control of your business and personal budgets.