Investment Risk

Summary: Tolerance and capacity are two ingredients of risk when it comes to investments and retirement planning. We look at what they are, and what kind of critical impacts they can create when planning for your golden...
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What's your risk tolerance? It's a standard question in investment management, and you might have a very clear answer. But whatever your risk tolerance, you're probably taking on a lot more than you realize and that...
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In our last article, we talked about the role of asset allocation in an investment plan. The topic this time is minimizing risk. It's a RISKY topic but let's start by stating the obvious, most people overly focus on...
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Investing your life's savings is different from investing speculative assets. For core assets, assets you can not afford to lose, safety becomes as important as growth. However, in order to capture growth one must invest...
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Many investors need equity returns to build wealth over the long term. Unfortunately, as individuals, we sometimes find it difficult to endure the sharp declines that we often experience in the equity markets. This was...
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Investment pros borrow a tool from the statisticians'standard deviation'to measure investment risk. It shows the range of returns that investments are likely to earn over a given period of time and it has two sides, the...
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If you could increase your investment success over the long term, would that interest you? As I progress through this paper, I will provide proof that your investment account is significantly impacted by two related...
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At various time in our lives, most of us are compelled to look at whether we are taking the appropriate amount of risk in our investment portfolios regarding our lives and our lifestyles. The subject can be confusing...
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It's time now, once again, to dispel those ugly rumors that "size doesn't matter" Indeed, size does matter in investing, and it matters just as unambiguously as when parallel parking a Buick in heavy traffic. The difference...
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Most investors see risk as the chance that they may lose money. But academics and statisticians, who have been studying risk in the financial markets for the past half-century, define risk as measurable uncertainty. And that...
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Yes this is not fun to learn, but for those of you who have lost a great deal of money (over 30%) in the past, want to know why it may have been avoidable and ways to help prevent it the next time, read on!! In part one...
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Over the last 10 years we have experiencing a market period like no other. Certainly the market sell-off of 2000-2002 was so much tougher than 1987 "bear market" (that lasted for arguably a couple of months), 1989-1990...
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In part one of this series, we explained two measures of risk, standard deviation and beta. In part two we talked about correlation and how it is the key driver of total portfolio risk (while most investors only consider...
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Previously we have discussed risk as it relates to investments on a stand-alone basis, how correlation is the key driver of portfolio risk, various alternative asset classes and historical risk and return profiles...
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The investments you choose throughout your life will likely vary based on the degree of risk you are willing to assume and the average return you can expect. Generally, the rule of thumb is that the greater the risk...
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Many people are familiar with the widely accepted notion that risk and return go together, but are unaware that it is an incomplete and misleading formulation. Let me restate it thus: "Return equals risk, which doesn't...
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Having a plan to preserve your gains and to manage your losses, should be the most important part of your investment strategy. I have noticed that most long term profitable investment strategies are not the ones with the...
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Risk is a four-letter word. To most investors, risk translates into the chances that a particular investment will lose value over a period of time. This is called Market Risk. While Market Risk is certainly a legitimate...
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In part one of this series, we explained two measures of risk, standard deviation and beta. In part two we talked about correlation and how it is the key driver of total portfolio risk (while most investors only consider...
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All investments, whether fixed income or equity, are exposed to some type of risk. The goal of investing is to balance the return earned from those investments with a level of risk an individual considers appropriate...
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Just as people shop for clothes according to personal tastes, some people select stocks, mutual funds, and investment divisions of variable contracts by styles. Two of the most popular investment styles in today's markets...
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While investors want the highest returns possible, returns compensate you for the risks you take - higher risks are generally rewarded with higher returns. Thus, you need to assess how much risk you are willing to take to...
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