Owning stocks may not be as risky as you think

                                                           Readers who are a bit skeptical about stocks should also realize that the risks that go with equity investments may not be quite what they think. It is true that putting all of your money into a single stock is very risky.  Owning a portfolio of four or five biotech or software stocks is also risky. However, a diversified portfolio, particularly one that includes mutual funds, offers a much different picture.

   Multi-year losses in the stock markets are rare, and that is a powerful advantage for investors. If a reader looks at the long-term average returns and standardized deviations of some major equity funds, an interesting stat appears -- over five years there is only about a 16% risk that an investor will see more than a low-single digit loss and over ten years, there is less than a 16% probability of losing any money at all. In both cases, the odds are significantly better than 50/50 that the investor will make money.

   Said differently, as long as an investor holds a diversified portfolio and invests for the long-term, the odds of losing money are actually quite low and the odds of achieving positive real returns are good.