Risk Pyramid

Draw a pyramid on a scrap of paper, then look at the image. You'll see that your pyramid is large at its base, smaller in the middle and very small at the summit. This model, which has been around for thousands of years, can also be used when it comes to assessing your investments.

When you use the investment risk pyramid strategy to decide how to invest money, you're building a portfolio that includes many low-risk assets, some medium-risk growth investments and a few high-risk speculative investments.