The method I use to maximize my risk to reward ratio
Hi all, With the current economic uncertainty, I have found this strategy one of the best ways to 'retain' your wealth as well as maximizing your risk to reward significantly. I have chosen to put spare cash into SPACs (special purpose acquisition company), which are close to the NAV of $10. SPACs are 'blank check companies' , which bring many companies public to the markets. The reasons below are why I choose to employ this method. 1. Extremely favourable risk to reward ratio The floor of $10 is something that works in the favour of retail investors. This minimises your downside risk tremendously if you get the share close to $10, while you have unlimited upside on the SPAC. Take note that this floor of $10 is only present on the SPAC pre-merger and once the merger happens, the floor is removed, so the stock can drop way below $10. In the scenario that the SPAC(pre-merger) drops below $10, when the merger date is announced, you can choose to redeem for $10, and your b...