Is the Reward Worth the Risk?

Risk versus reward is one of my favorite subjects in investing...

When I recommend a company to my Retirement Millionaire subscribers, I always weigh the risk of catastrophe against the potential rewards.

My goal is finding low-risk investments that can produce consistent annual gains. And I always advise using a few simple tools – position sizing, trading stops, and asset allocation – that can lower your risk even further.

But this way of thinking applies to more than just your portfolio.

Whether you're taking medication or just planning your next snack, you should weigh the risks and rewards.

Today on request of two of our Daily readers, we're weighing the risks and rewards of two controversial topics: aspirin and aspartame.

Have a topic you want us to cover? Did you take our advice to add Steve's service to your portfolio risk versus reward toolbox? Let us know at [email protected].

Q: I used to take one [aspirin] a day, on my doctor's recommendation. But, quit when I read about a study in Australia, about five years ago, that recommended people over 70 not take aspirin, because of possible stomach and brain bleeding. That study, and conclusion, was duplicated by two university research studies in the U.S. within the last year. I just read that Dr. Oz recommends two aspirin a day based on recent studies, but did not mention anything about age. – W.R.

A: Regarding aspirin, there are concerns that too much of it causes serious health problems.

The U.S. Preventive Services Task Force (USPSTF) recommends people between the ages of 50 and 59 take a low-dose (81 mg) aspirin every day to prevent heart attacks and colorectal cancer. For people between the ages of 60 and 69, USPSTF recommends daily low-dose aspirin for those at higher risk of heart attacks. And if you're 70 or older, USPSTF says, "the current evidence is insufficient to assess the balance of benefits and harms of aspirin."

That's what many doctors debate... whether it's worth the risk for people without cardiac symptoms. The problem is that aspirin can cause bleeding in the brain or stomach when it's taken too frequently.

There's good research suggesting regular low-dose aspirin use protects against cancer. For example, the Mayo Clinic released a study on using aspirin to prevent breast cancer in women who have a family history of the disease. The results so far look promising.

But it's up to you (and your doctor) to determine whether the risks of aspirin outweigh the benefits for you. And that depends on your age, health, and family history.

As for me, I take a single regular-strength (325 mg) aspirin once a week.

Q: From what I understand, the maximum acceptable daily dose [of aspartame] is 50mg/Kg (or about four grams for a 160-pound person). But do you folks worry about ingesting it? How much is in a can of Diet Coke? – J.H.

A: Sodas – diet or not – are about the worst thing you can drink on a regular basis. Sugary drinks like soda increase inflammation in your body, which increases the risk of heart disease.

Diet soda isn't much better... Many diet drinks contain a sweetener you mentioned called aspartame. Aspartame is a no-calorie sugar substitute, which also increases inflammation, damages healthy gut bacteria, and causes headaches.

The science on aspartame is all over the place... For one thing, most studies have been on rats, not humans. And there is some limited evidence that aspartame leads to insulin insensitivity the same way sugar does.

Aspartame is made of three chemicals – methanol (a poison), aspartic acid (poisonous), and phenylalanine. Phenylalanine is an amino acid that makes up 50% of aspartame's structure.

Phenylalanine is critical in the body's functions in building proteins... But if you have a disease called phenylketonuria, your body is unable to process phenylalanine. And large quantities of aspartame quantity could cause mental retardation.

For most people, moderation is best.

How much is too much?

If you just want to look at aspartame...

In the U.S. the recommended limit of aspartame is 50 milligrams per kilogram of body weight per day. That means a 150-pound person would have a limit of 3,402 milligrams per day. There are 187.5 milligrams of aspartame in one 12-ounce can of Diet Coke. That's 18 cans of Diet Coke.

But that says nothing about the other health risks with diet soda (and sugary soda).

I prefer to avoid soda. If you want a healthy option, do what I do... Drink green tea. Green tea is calorie-free, lowers cholesterol, fights cancer, and keeps immune systems strong. One of my favorite brands is Bigelow.