Money Maker
  • Home
  • Investments
  • Forex
Promotions under $ 10 that are ready to take off
Promotions under $ 10 that are ready to take off
20.09.2020
Capital growth strategy
Capital growth strategy
24.09.2020

Your portfolio risks

Your portfolio risks


The lesson investors need to understand when building their portfolios. To maximize their potential profitability, they must be willing to bear some risk and suffer losses, at least for a while.

But how frequent and profound can these losses be before the risks are no longer beneficial? Analysis of investment funds over the past 20 years shows that risks at the level of 19.5% of the annual standard deviation and 25% of unprofitable years brought the maximum return, while the return on funds with higher (and lower) risk was lower.

This is a vital point. The main objective of a well-diversified portfolio is to provide the appropriate level of return required by the investor, but to do so in a way that minimizes both the frequency and magnitude of annual losses.
Why? Because investors watch and often react badly to investment losses.

The typical measurement of risk is the standard deviation of return, but this is not intuitive for most people. Very few investors calculate the standard deviation of their portfolio, but everyone can probably remember the last time their portfolio had negative annualized returns and even the size of a loss at that time.

It is impossible to build any portfolio without risks, which means it is worth taking risk for granted.

Related posts

Google has trouble in Europe
28.10.2020

Google has trouble in Europe


Read more
Norwegian sovereign wealth fund to abandon oil and gas investments
25.10.2020

Norwegian sovereign wealth fund to abandon oil and gas investments


Read more
The richest people in the world
21.10.2020

The richest people in the world


Read more

SIGN UP FOR
NEWSLETTER

Subscribe

CATEGORIES

  • Investments

TAGS

American Apple banks bubble capital Central companies company crisis dividends dollar ECB economy eurozone exchange Exchanges financial Global gold growth Index invest investing investment Investor Investors market markets mistakes Money pay people portfolio Reform rich risks SampP Shares stock stocks Successful tax war world year

FIND US



Recent posts

  • Google has trouble in Europe
    Google has trouble in Europe
    28.10.2020
  • Norwegian sovereign wealth fund to abandon oil and gas investments
    Norwegian sovereign wealth fund to abandon oil and gas investments
    25.10.2020