Core Concept - The article emphasizes the importance of weighing risks against rewards in investing, highlighting that no investment is completely risk-free and that understanding this balance is crucial for achieving financial goals [1][15]. Risk in Investing - Risks in investing are categorized into several types, including market risk, inflation risk, foreign exchange risk, liquidity risk, and default risk [6]. - An example illustrates that while a low-interest savings account offers safety, it risks erosion of cash savings due to inflation, which has averaged 2.36% over the last five years, compared to the historical annual returns of about 8.3% for Singapore's Straits Times Index [4]. Reward in Investing - Rewards from investments can come in various forms, such as capital gains, dividends, and interest income from fixed deposits [5][7]. - Singapore Airlines is cited as a popular dividend stock, having paid out a dividend of S$0.40 over the past 12 months, resulting in a trailing dividend yield of 6.1% based on a share price of S$6.54 [8]. Risk-Reward Trade-Off - The general rule in investing is that higher risk typically correlates with the potential for higher returns, as seen with high-risk assets like cryptocurrencies versus lower-risk government bonds [10]. - Medium-risk assets, such as blue-chip stocks, can offer capital gains and regular dividends, but investors must research the fundamentals of these companies to ensure they can withstand market volatility [11]. Balancing Risk and Reward - Beginners are advised to start with lower-to-medium risk investments and gradually include riskier assets as their knowledge and confidence grow [12]. - Key considerations for investors include their investment horizon, risk appetite, and desired diversification, which will influence the types of financial products they choose [14]. Investment Strategy - The article stresses the importance of not chasing high returns without understanding the associated risks and encourages prudent long-term investment strategies [18].