The higher the potential gain of an investment, the higher the risk of losing capital. Gains and risks always go hand in hand!
One of the best measures of portfolio risk is portfolio volatility. Volatility measures the variability in the value of the portfolio. A portfolio that has historically varied by + or - 25% is more risky than one that has varied by only 5%. Obviously, the expectation of gain is lower with the latter. In the stock market, the past is not necessarily a guarantee of the future.
A portfolio is efficient if either of the following conditions is met:
For a given level of expected return, there is no other portfolio with less risk.
For a given level of risk, there is no other portfolio with a higher expected return.
Even if the risk is proportional to the expected gain, it is always possible to find a portfolio where the expected gain vs. the risk is the most advantageous for the investor.
A financial professional will start by measuring your acceptable risk level. The one that allows you to sleep well at night. From there, he will build a portfolio or portfolios corresponding to your risk profile located on the efficient frontier.
As an independent professional, we have the tools and knowledge to advise you on your investments. We have no constraints or quotas to respect in the choice of your investments.
Finally, as your advisor, we must do everything possible to improve the efficiency of your portfolio.