Conversely, there are cases of people inheriting large lump sums and being advised, in an all-time-high stock market, into a portfolio comprising almost entirely individual shares. This too proves catastrophic if the market collapses a year later and remains so for a long time.
Most people do not want to gamble with their money, but neither do they want it to stagnate in an insufficiently aggressive mix.
A high-risk portfolio need not be gambling at all, but the mix of investments, the asset allocation, needs to be appropriate and sufficiently diversified. Even if mainly in one asset class, it is often possible to diversify adequately and ensure that one is not compelled to sell at a massive loss when the markets or personal circumstances change.
In short, both investing and gambling entail risk. But they constitute two very different activities, such that mixing the two, or doing the wrong one inadvertently, is highly inadvisable.
What matters is to understand yourself, what you want, and how to get there through your financial activities.
Brian Bloch is a freelance journalist
