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Investopoly
Each episode is packed with concise tips, strategies, research, methodologies, case studies, and ideas to help you safely and effectively grow your wealth. Stuart Wemyss, a qualified financial advisor, accountant, tax agent, and licensed mortgage broker, delivers holistic advice. With four authored books, including "Investopoly" and "Rules of the Lending Game," Stuart shares his insights through a weekly blog, which is replicated on this podcast.
Investopoly
Ep 349: Investor risk premium: what is it and why it matters
New Report: The Evidence-Based Approach to Investing in Property & Shares: download here.
Read full blog here.
In this episode, Stuart breaks down the 'Investor Risk Premium', a key concept that helps you assess whether you’re being fairly rewarded for the risks you take with your investments. Traditionally used in share investing, Stuart explains why this idea should apply to all asset classes, from shares and property to speculative assets like crypto.
Right now, U.S. equities appear overvalued, with future returns unlikely to match the past decade’s gains. In fact, forward-looking data suggests the expected equity risk premium in the U.S. is negative, meaning investors may not be adequately compensated for the risk.
By contrast, Australian shares and property offer more attractive return prospects, especially when measured against the risk-free rate.
The key takeaway? Don’t chase past performance—focus on future returns relative to risk. Whether you're investing in shares, property, or anything else, you need to ensure the expected return is worth the volatility, liquidity constraints, and uncertainty you're taking on.
A sound, evidence-based strategy that prioritises risk-adjusted returns is the smartest way to build long-term wealth. Tune in to learn how to apply this thinking across your portfolio and avoid the common traps of emotional or trend-driven investing.
Do you have a question? Email: questions@investopoly.com.au or for a faster response, post a comment on the episode's video over on YouTube: https://www.youtube.com/@investopolypodcast/podcasts
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IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.
