Asset Allocation & Risk

What is the relationship between risk and return?

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Generally, expecting higher returns requires taking on greater risk; this is called the risk-return trade-off.

Expected return and risk tend to increase together in the order of short-term debt, long-term debt, real estate, high-yield bonds and stocks, and the ranges of these asset classes can overlap. Conversely, if someone offers high returns with no risk, you should be suspicious first.

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This answer is general financial information as of 14.10.2026, not investment advice. Rules and tax rates change, so please also check the latest guidance from the source institution.