Which Investment Type Typically Carries the Least Risk?

The tradeoff between investment risk and reward (or potential return) is one that every investor needs to decide individually. That balance will likely change depending on the investor’s goals, circumstances, and age. But many investors seek a balance between risk and reward by hedging their portfolio allocation according to their risk appetite. For example, the traditional 60/40 portfolio consists of sixty percent equities and forty percent fixed-income instruments, like bonds. The stocks typically offer a more significant opportunity for growth but carry the risk of loss. In contrast, the bonds provide a smaller potential value increase and often less volatility. In theory, the stocks offer growth over the long term, while the fixed income holdings provide a hedge to help manage exposure to periodic value drops.

Nov 10, 2022

How Can I Manage Inflation Risk?

Unless you’ve been stationed in Antarctica or the International Space Station these past 12 or so months, you’ve likely noticed huge increases in the cost of just about everything, from gasoline to groceries to goods and services. 

Nov 7, 2022

What is Macroeconomic Risk?

We’ve said it before, and we’ve said it often: There is no such thing as risk-free investing. Certainly, there are varying degrees of risk when investing. But all investments carry risks including (but not limited to) capital, default, currency, inflation, and interest rate risks. 

Nov 3, 2022

Does Real Estate Diversify a Portfolio?

Diversification is crucial to a balanced investment portfolio because it can help investors potentially reduce their exposure to unsystematic risk factors. These factors can include liquidity, financial and business risk, and investors can attempt to manage the impact these factors may have on their portfolios by diversifying their investment capital across a broad swath of industries, financial instruments, and alternative investment options. 

Oct 24, 2022

Is Real Estate an Inflation Hedge?

Inflation can destroy the value of an asset that doesn’t increase as inflation increases. This is especially true in depreciating assets such as cars, bicycles, and boats. The asset needs to have some underlying feature that allows it to increase when inflation increases. When that happens, the asset acts like a hedge, offsetting the value-decreasing effects of inflation.

Oct 12, 2022

How Do I Build a Diversified Real Estate Portfolio?

Building a diversified real estate portfolio follows many of the same principles required to build a diversified stock portfolio. Pursuing low correlations across assets and choosing from different assets are all meant to help manage the portfolio’s overall risk — a goal of diversification. 

Sep 26, 2022

Discover Ways To Help Manage Risk In Your Investment Portfolio

Discover Ways To Help Manage Risk In Your Investment Portfolio
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