Asset Allocation: Managing Investment Risks
One of the ways on managing your investment risks is through asset allocation. In asset allocation, your money will be allocated to different investments so that there is lower risk involved. Before investing or choosing your vehicles you must first answer these basic questions: Where will I use the money (is it to purchase a dream car, a house or to pay for next years vacation)? How much risk can I tolerate?
The question of for what purpose will the money be used will determine the length of time the investment will run. It is because the longer the time allotments, the higher probability for it to have a large capital gain. That is the rule in investing. We often hear financial advisors ask us this same question because the first rule in investing is that first you should have a plan. There are many types of investments out there and knowing the right one for you will make the whole experience educational and agreeable.
Second question will determine how much risk an investor is willing to take. In this way, you and your financial advisor can clearly map out the possibilities available for you should you decide to start with a low risk investment. It is also important to know that low-key or low risk investments have the possibility to offer you with lesser capital gains. You have to keep that in mind because it is utterly a shame to be investing in low key investments and wonder why youre getting very little percentage rate increase.
There are basically three types of assets investments and these are cash, stocks or bonds. You may play with these three types to have a more diverse investment portfolio. You may allocate your money through these three types of investments. There is an advantage through this so that you can easily offset it once one starts to show signs of declining.
The solution of asset Allocation is a wise choice and a great equalizer for your investment. It is also a best and classic example of managing risks. - 23212
The question of for what purpose will the money be used will determine the length of time the investment will run. It is because the longer the time allotments, the higher probability for it to have a large capital gain. That is the rule in investing. We often hear financial advisors ask us this same question because the first rule in investing is that first you should have a plan. There are many types of investments out there and knowing the right one for you will make the whole experience educational and agreeable.
Second question will determine how much risk an investor is willing to take. In this way, you and your financial advisor can clearly map out the possibilities available for you should you decide to start with a low risk investment. It is also important to know that low-key or low risk investments have the possibility to offer you with lesser capital gains. You have to keep that in mind because it is utterly a shame to be investing in low key investments and wonder why youre getting very little percentage rate increase.
There are basically three types of assets investments and these are cash, stocks or bonds. You may play with these three types to have a more diverse investment portfolio. You may allocate your money through these three types of investments. There is an advantage through this so that you can easily offset it once one starts to show signs of declining.
The solution of asset Allocation is a wise choice and a great equalizer for your investment. It is also a best and classic example of managing risks. - 23212
About the Author:
Mara Hernandez-Capili is a writer and a researcher on Business and Finance. Learn more on how to increase your financial I.Q. by learning about emini trading today. Start earning extra income by making your money work for you through the emini trading system. "Start your journey to financial freedom not tomorrow, not next week, but today.
posted by X - Men @ 12:43 AM
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