Edward,
the German Central Bank-Bundesbank just realeased a report saying Woman are bad at risk-taking....
http://ftalphaville.ft.com/blog/2012/03/27/939031/bundesbank-comes-out-against-women-war-on-all-good-things-continues-puppies-and-ice-cream-targeted-next/
What do you think?
I think as the FT clearly says,its a silly report.
Ashish.
True, the Risk of Inflation is very real. And most people don't seem to see it as a risk.
If you have a lot of capitol to invest, then you should have a good long term investment plan or strategy which hopefully makes you more willing to take on risk. If you are low on funds, you have to dig deep and figure out what will be the next big thing before anyone else figures it out, that is hard to do, so maybe you spread your bets on what you think will be big in the future, and then when you have more funds, come up with a long term plan. Of course a little speculation will keep you interested in the markets, no matter what your plan or capitol situation is.
Great post while being risky is a romantic concept most of us want our romance with our investments to reflect long term love and affection also know as healthy growth. We have all been burned by many of these points especially when we were new investors, I find my most fickle friends are the ones that have the biggest wows and the biggest lows. While studying investments, making calculated decisions and buying and selling with our comfort level are not as romantic they will build more confidence as a personal investor. It’s a lot of work that many don’t want to do. It’s so much more sexy to say I got a hot stock tip that paid off big than say I spent three months researching a mutual fund that yielded 12% growth in 18 months…..
Out of the six points of advice that you gave, "Stick with a strategy" is the most integral point (in my opinion)...it is always best to find a comfort level or zone and stick with it. If its been working for you continue to allow it to prosper. Just about everything in life is a risk, so if you can find a level that is appropriate for you, as the old saying goes: "If it ain't broke, don't fix it!"
Re: Risky or not?
Phoenix
4/12/2011 8:35:25 AM
I agree with you, you have to have a balanced investment portfolio. Your own risk tolerance level should be reflected in your portfolio. For example if we categorise the investments into 'low', 'medium' and 'high' depending on the level of risk the percentage of each should depend on your own risk tolerance level.
People who are comfortable taking high risks can have a larger percentage of 'high' risk investments in their portfolio while people with low tolerance could have a higher percentage of 'low' risk investments. A greater awareness of your own tolerance level would enable you to do this.
Another aspect to consider is 'What is the worst case scenario?'. Asking yourself whether you are willing to accept the worst case scenario will enable you to have a good understanding of your own tolerance level.
Re: Risky or not?
Phoenix
4/12/2011 8:23:56 AM
Crossing with the crowd cannot be categorised as all 'bad'. The people who do good ground work and get to the right place at the right time profit.
Re: Risky or not?
Broadway
4/11/2011 9:56:16 PM
The point in the blog that stood out to me: beware of crowds. Makes me think of those National Geographic shows about mass migrations of wildebeasts, when they reach the river and they all cross although they know that a few of them will be viciously eaten by the lurking crocodiles.
Instead in the market, when things turn ugly, most of the "wildebeasts" are going to get it, not just a few. Worse yet, it's the "crocs" who trick the crowd into believing it's a great idea to cross the river with everybody else. Risk? What risk?
TelecomFreq: Great point. In this messed up investment world 1% treasury bonds can now be considered risky because if inflation and rates spike you will fall behind on inflation and the value of bonds will fall. It shows you how hard it is to investo in a world of zero interest rates. It's also punshing low-risk savers.
Parking money in a CD or a savings account that pays 1% might be a guaranteedreturn, but i would not call a 1% return "Safe", not if you are investing to build your wealth for your future.
You make an excelent point; inflation could destroy your portfolio rather quickly.
In any case a diverse portfolio is always a smart idea. Play it safe with some investments and take a varied amount of risk with others.
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