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How To Determine Your Risk Tolerance In Investing
When looking at your portfolio of investments, can you recall why you choose those particular investments? Was it because of income or appreciation potential? Maybe it was because someone said it was a good investment? Or did you choose it based on your risk tolerance?
How Can Portfolio Diversification Help Protect Investors?
Portfolio diversification is a fundamental investment strategy. That doesn't mean it comes built-in — the investor must still employ it. Properly implementing portfolio diversification can help protect an investment portfolio.
How to Measure Diversification in a Portfolio
For anyone who has done some reading on investment risk management, you’ve very likely come across portfolio diversification. The goal of portfolio diversification is to create a portfolio of investments that have low volatility. That means the value of the portfolio should not fluctuate as much as a similar non-diversified portfolio.
What is Portfolio Diversification and Why is It Important?
Imagine buying several similar property types in the same area of town. These properties make up your entire portfolio. At this point, your portfolio is highly dependent on the outcome of properties in this one area of town. That’s another way of saying there’s increased portfolio risk due to the concentration of properties in one area.
Which Investment Types Can Help Manage Risk?
To understand which investment types can help manage risk, we need first to define risk. This might seem like a redundant thing to do since most people have some idea of what risk is. The problem is that risk can mean different things to different people.
How is Risk Calculated in Stock Investing?
Calculating risk is an involved topic. You can go on and on identifying and mitigating risk. Of course, you have to reach a point that you stop analyzing and deem an investment worth the risk. We're going to look at what goes into that assessment by using a top-down approach.
How Gauging Real Estate Risk Differs from Gauging Stock and Bond Risk
You’ve heard it before, and we will continue to repeat it: There is no such thing as a risk-free investment. Yes, some investments carry a lower degree of risk. And, risk can be managed through due diligence, plenty of research, and self-analysis pertaining to risk tolerance. But the act of investing requires acceptance of risk.
What Is Indexing And How Does It Help You Understand If You Are Getting A Good Return?
If you own an investment that returns 8%, is that good? How do you know? If you’re satisfied with 8%, what are you basing that satisfaction on? Indexing a way to help answer these questions. Indexing measures the comparative performance of two or more investments. It works by benchmarking an investment to a similar well-known, broadly used investment vehicle. For example, a S&P 500 ETF would be benchmarked to the S&P 500 index. In other words, it tracks the S&P 500 index and is expected to perform similarly to the S&P 500.
Evaluating Real Estate Risk
Every investment involves risk with the possibility of gain. Where risk is the potential for financial loss and/or uncertainty in investment decisions or activities, accurately quantifying the level of risk is key to healthy investing.
Real Estate And Property Risk
Most investments come with some degree of risk. Generally speaking, the greater the risk, the higher the return requirements on your investment.
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