Finance

Tweets on 2012-03-07

Read elsewhere —

Risk is typically measured as the variability of returns. Thus, a bank fixed deposit with sure shot 10 percent returns versus a mid-cap stock that could return 30 percent or lose 10 percent have very different risk-return profiles.

I also happened to read an interview with the CEO of a life insurance company where it was quoted that “the insurance company asked its customers if they’d like the insurance company to manage their investments and 95% of the customers replied in the affirmative.”

That’s one risk-return bet I’d advise you not to take — ever.

Life insurance — and insurance in general — shouldn’t be a risk-return game. It’s a risk-only game. You can do much much better elsewhere on the returns-game.

Seriously, I wonder who these people who replied in the affirmative are. Then again, I have my own doubts about the sample set chosen.

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