Assessing Risk

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How to Manage Risks to Your Portfolio in an Uncertain Economy

In addition to volatility of individual securities, you also face risks related to your life span, market changes, and more. The following table explains how to minimize risks. [more…]

How to Increase Returns While Decreasing Risk in an Uncertain Economy

In an uncertain market, the key to managing risk is diversification. By combining different types of investments, you can get the major benefit of diversification: a relatively high rate of growth, with [more…]

The Dangers of Growth Manias

Wall Street’s mantra is “anything worth doing is worth overdoing,” and growth versus value is no exception. In the uncertain times of the last 40 years, growth-stock investing has twice been taken to extremes [more…]

Emotional Risks in an Uncertain Economy

In an uncertain economy, the biggest threat to your financial freedom may be you. When the market went through its painful three-year downturn beginning in 2000, many investors decided to run for the exits [more…]

High-End Investments: Futures, Options, and Commodities

If you want to try your hand at high-end investment, you might think about futures, options, and commodities. In some ways, higher-end investments aren’t much different than traditional investments: You [more…]

High-End Investments: Foreign Currency Trading and Hedge Funds

You can put your money in high-end investment vehicles, such as foreign currency trading (or forex) and hedge funds. High-end investing involves not so much investing [more…]

How to Weigh Investment Risk against Return

How much risk is appropriate for you, and how do you handle it? Before you try to figure out what risks accompany your investment choices, analyze yourself. Here are some points to keep in mind when weighing [more…]

How to Invest in Stock in a Bear Market

Sticking to a buy-and-hold strategy (where you buy stock and hold onto it for better or worse) at the onset of a bear market is financial suicide. People have a tough time selling, and financial advisors [more…]

Stock Investing in an Uncertain Market

The end of a bear market doesn’t automatically mean the beginning of a bull market and vice versa. Sometimes markets move sideways or very little either way until investors and participants in the economy [more…]

Which Bonds Are Riskier as Investments?

Every year, millions of bonds are issued by thousands of different governments, government agencies, corporations, and municipalities. The following list looks at the degree of risk for each major kind [more…]

“Risk-Free” Investing: U.S. Treasury Bonds

The U.S. Treasury issues lot of different kinds of debt securities. Savings bonds, which can be purchased for small amounts and come in certificate form [more…]

What Are Treasury Bills, Notes, and Bonds All About?

About 98 percent of the approximately $5 trillion in outstanding Treasury debt is made up not of savings bonds but of marketable (tradable) securities known as bills, notes, and bonds. [more…]

How a Corporation’s Credit Rating Relates to Risk and Returns

The largest determinant of the risk and return you take on by investing in bonds is the fiscal strength of the company behind the bond. A company’s credit ratings are the measure of that financial muscle [more…]

How Are Callable Bonds Risky?

If you own a callable bond, chances are that it will be called at the worst moment — just as interest rates are falling and the value of your bond is on the rise. At that moment, the company that issued [more…]

Agency Bonds: The Risks and Returns

All agency bonds are considered high quality with very little risk of default. The honest-and-true federal agencies, such as the Small Business Administration [more…]

Rating Municipal Bonds: Safe Investments

Municipal bonds are very safe animals — at least those rated by the major rating agencies (such as Moody’s), which are the vast majority of munis. If the mild nature of the beast weren’t enough to put [more…]

How to Choose a Municipal Bond

When choosing a municipal bond, or muni, there are a lot of things to consider. First, you definitely want munis that are rated. Some municipal offerings are not rated, and these can be risky investments [more…]

ETF Investments Start with Opening a Brokerage House Account

Before you can invest in exchange-traded funds, you’ll need to open an account with a brokerage house. The brokerage will ask lots of questions related to your personal finances, your financial goals, [more…]

How to Manage Risks with ETFs

Asking how risky, or how lucrative, ETFs are is like trying to judge a soup knowing nothing about the soup itself, only that it is served in a blue china bowl. The bowl — or the ETF — doesn’t create the [more…]

ETF Investment Strategies to Reduce Risk, Optimize Return

When you invest in exchange-traded funds (ETFs), you're wise to invest in both large growth and value stocks — separately. That approach gives you the opportunity to rebalance once a year and, by so doing [more…]

What Are Income Annuities?

Income annuities enable you to convert a large sum of cash into a monthly, quarterly, or annual paycheck. You give the lump sum to a reputable insurance company, and the insurer issues a contract that [more…]

Characteristics of Futures Trading

Futures contracts are by design meant to limit the amount of time and risk exposure experienced by speculators and hedgers. As a result, futures contracts have several key characteristics that enable traders [more…]

What Do Hedgers and Speculators Do in Futures Trading?

The two major categories of traders are hedgers and speculators. Although these two groups trade in the futures market, they are trying to accomplish very different objectives. [more…]

How to Use Stock Options to Your Advantage

The options market goes hand in hand with the futures markets. When used properly, options give you an opportunity to diversify your holdings beyond traditional investments and to hedge your portfolio [more…]

How Implied Volatility Figures In Options Trading

The first step to trading options based on implied volatility is to buy and sell them correctly at the best possible price. This may sound difficult but can be made relatively easy by option trading software [more…]

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