Now that we’ve established the importance of minimizing systematic and unsystematic risk, let’s discuss the upside associated with risk: larger payouts over time. First, it bears repeating that you will …
Investing Blog
The Upside of Risk
The (Scientific) Method Behind Modern Investing
To better understand why Asset Allocation and Diversification are so important, we turn to mountains of research by Nobel prize-winning economists. Modern Portfolio Theory and Diversification In 1990, Harry Markowitz, …
Definition: Fixed income
Fixed income investments are typically municipal bonds or treasuries) that pay a predictable premium on a regular schedule. They are considered “fixed” because the amount of the premium is known …
Definition: Correlation
A correlation is a connection or relationship between two or more things. Investments that are “positively correlated” will be affected by the same systematic risk, such as a slowdown in …
Definition: 4 Types of Risk
Systemic Risk generally refers to an event that can trigger a collapse in a certain industry or economy. Systematic Risks refers to overall market risk. It is the risk inherent …
Implementing an Investment Strategy
I’ve alluded to different investment options, such as mutual funds or index funds. There are three options, so let’s consider them here. 1. Buying Individual Stocks You can open a …
Your Portfolio During Retirement
At the opposite extreme of investments for young investors is money being saved for retirement. You’re not going to spend all of it 10 years, six–nine years, three–five years, or …
Basic Risk Models
To accommodate the different investors’ levels of risk tolerance, we use four basic risk models: Conservative, Moderate, Growth, and Aggressive. Each refers to the time horizon of the investment. Conservative …
Determining Your Investment Objectives
We all want the greatest expected return for the lowest level of risk, but all of us have different tolerances for risk. The first steps are to consider when determining …
The Benefit of Investing in Funds with Low Turnover Ratios
A fund with a higher turnover ratio purchases and sells more stocks, bonds, and other financial instruments during a given period than a fund with a lower turnover ratio. More …