Originally Posted by
Snoopy
The only way to accumulate a house deposit faster, with no downside, is to take out a risk free investment and accept the risk free rate of return. This is similar to what ENP is doing with his term deposits. To accumulate your savings faster than the risk free rate of return carries an implied downside risk as well, even if that downside risk is not openly stated.
Conversely, no one would consider an investment (even a hedging investment) where a negative return, on balance, was certain. The risk that an investor ends up worse off must always be balanced by the possibility that the same investor ends up better off. Otherwise what our investor would be doing would be akin to flushing money down the toilet rather than investing.
Upside and downside are of necessity an integral part of the investment process. That doesn’t mean the magnitude of the upside is always exactly equal to the magnitude of the downside. It doesn’t mean the consequence of the upside will exactly balance the consequence of the downside. But it does mean that when you take out an investment you have to consider all possibilities of what will happen, not just a summary expressed as the weighted average most likely outcome.