Risk

There are several definitions of “risk” but the most appropriate is “the possibility” that “bad consequences” range from the entire investment being irretrievably lost to the mildest form, namely the investment has lost its current value, coupled of course with the possibility of a recovery to former value.

There is a widely held view that the share market is a risky place to invest. This view doesn’t match the reality that speculative fortunes are regularly being made – not always solely by professionals – alongside those investors whose grandparents bought them BHP shares when they were born.

Those of us who have a dividend reinvestment plan in place have the best of both worlds because we can take advantage, and some pleasure, in the fact that occasionally our dividends can be invested back at a time and a price when the market in that company is lower than “normal”, whatever normal means!