#98 - Samuel Rhee : The Secret To Financial Security in 2026

for countries managing risk is a lot of times they look at you know your physical security your food security and perhaps even your macroeconomic or social security but if you boil it down to the individual level say everyday person how should they understand this concept of risk

Yeah, risk is basically something that has a very bad reputation because everybody thinks risk is a bad thing.

But if without, we don't have risk, then we don't have returns.

And so risk is just the other side of the coin that is returns.

And those are correlated, it moves together.

So if you have higher risk, then generally you would expect higher returns.

And if you don't take any risk, the return should be very low if there is any return at all.

And so that correlation exists.

Now, a lot of mistakes that people make, whether you're professional or individual, is that you take risk, but you don't get compensated for it.

Meaning that you take too much risk on something, but the return isn't there, right? That's the worst kind of outcome, right? So I think risk is defined in financial markets as volatility.

It doesn't just mean that things just move around and it's volatile.

It means that the outcome or the result, the return that you expect is not going to happen every single year.

That certainty of return is lower with higher risk because the volatility is higher.

So one year, let's use an example, stock markets can be up 50% or down 50%, right? That's volatility of outcomes.

But every single year, it's normally within a narrower range of, let's say, plus minus 10%, 20%.

That's the normal range.

And if you invest for a longer period of time, then the average return of markets gravitates towards the 7% to 10% returns.

So the volatility is the outcomes are varied.

It's actually quite volatile every single year.

But over the long term, you're going to generate the returns that are going to be higher because of that volatility and risk that's inherent in a certain asset class like stocks.

Bonds, by definition, is lower risk, less volatile, and therefore lower return.

And if you do cash or deposits, it's very low risk and very low returns.

So that's what volatility and risk actually means.

And as I said, going back to the original point, you should take some risk that's appropriate for why you're investing, the goal you have for this investment, that allows you to generate the return you need to reach that goal.

So the longest goal that we have as any individual is retirement.