Learn why spreading your bets is the closest thing to a free lunch.
Lesson 1 of 4
In investing, risk usually means how much a value swings up and down. Cash barely moves. Bonds move a little. Stocks can rise or fall 20% or more in a year.
Higher expected returns usually come with bigger swings. There is no reliable way to get stock-like growth with savings-account calm.
Pick a real market shock and see how far each investment fell and how long it took to come back.
Hawaiʻi had only 3,565 visitors in April 2020 and unemployment hit 23.5%. Stocks crashed and recovered within months. Tourism stocks took far longer.
| Investment | Worst fall | Low point | Back to its old high |
|---|---|---|---|
| S&P 500 index fund | -19% | Mar 2020 | 6 months later |
| Host Hotels & Resorts | -35% | Oct 2020 | 13 months later |
| Alaska Air Group | -56% | Mar 2020 | 13 months later |
| Total bond market fund | -4% | Mar 2021 | Not yet |
Monthly total return, so short intra-month dips look smaller than they were.
Your best score is saved in this browser.
Answer every question to check.
For learning only. Kuleana Finance explains how money works. It does not tell anyone what to buy or sell.