Risk is an unavoidable aspect of every investment. There are many different kinds of risk, from rising interest rates to liquidity to regulatory and operational risk.
Building an investment portfolio involves crafting a strategy for deciding where to invest funds. Often, investors choose asset types and then select specific targets within those categories. For example, if you prefer a traditional 60/40 allocation, you would direct approximately sixty percent of your investment funds to equities and the remaining forty percent to bonds or other conservative instruments. Within those two asset categories, the investor can choose from large and small-cap stocks, domestic or international companies, industry, company age, dividend-paying or reinvesting, and more. In the bond portion, there are plenty of options as well.
Whether you’re an investor or business owner, tax law can be hugely complex. The bible of United States federal statutory tax law is the Internal Revenue Code (IRC), which is implemented and enforced by the Internal Revenue Service (IRS). The IRC contains 11 subtitles, covering income taxes, employment taxes, health benefits, group health plan requirements, and more.
When discussing risk, there are articles about evaluating real estate risk, determining risk profiles, and how property risk differs from that of securities.
Our blogs continually drive home the point that all investments have a degree of risk, such as business risk, credit risk, and micro market risk. There is also systematic risk, which includes inflation, interest rate changes, recessions, and even pandemics.
Whether you are applying for funds to buy an investment property or considering tenants for a rental property you own, understanding default risk is an essential part of the process. Default risk is a concept that lenders and landlords use when determining whether to lend money or sign a contract with renters.