Risk, Insurance & ProbabilityRisk

Risk and Reward Travel Together

Higher possible gains come with bigger possible losses

US stocks once gained 52% in a single year, and once lost 44%. Can you ever have the first without the second?

You'll find out

  • How far each kind of money swings
  • What the bumpy ride paid since 1928
  • Why wild isn't the same as rewarded

Why it matters

Almost every money choice sits somewhere on one line. Knowing where yours sits is the first step past guessing.

About 3 min6 interactive slides · 5 questionsLesson 73 · Zone 9

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  3. 76ProbabilityExpected ValueWhat a bet is worth on average
  4. 77LotteriesThe Lottery Is Worth a ShotA Powerball ticket loses money on average
  5. 78Loss AversionLosses Hurt Twice as MuchLosing $100 stings more than winning $100 feels good
  6. 79InsurancePremiums and DeductiblesWhat you pay every month and what you pay when it happens
  7. 80Expected ValueIs the Warranty Worth It?Price the extended warranty with real odds
  8. 81UncertaintyThe Farmer's Lost HorseIn an old Chinese parable, each piece of bad luck turns out good, and each piece of good luck turns out bad