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Investors Shun Risk

On 04/04/2012, in Investment Concepts, by Jordan Wilson

A relationship exists between investment risk and expected return.

The safer the asset, the lower the expected return. The greater the investment risk, the higher the required return. Or it can be a tad more technical if you like.

Investors should take an objective view of investment risk. Unfortunately, investors tend to be emotional creatures and these volatile times lead people to become fearful of investment risk.

So what is happening? And what should you do as an investor?

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Emerging market investments can add value to one’s portfolio.

On the one hand, emerging market assets provide potential diversification benefits that help lower overall portfolio risk.

At the same time, emerging markets offer potentially higher returns than investments in developed markets. This helps enhance overall portfolio expected returns.

Lower portfolio risk, higher expected returns, count me in!

Well, like any investment, there are always a few strings attached. 

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Emerging markets are popular investments for many investors.

Why?

Emerging market investments may aid in reducing portfolio risk through enhanced diversification. At the same time, there is also the potential for higher returns in less developed markets.

Today we look at what constitutes an emerging market. 

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Are You Saving Too Much?

On 12/08/2011, in Financial Advisors, Investment Concepts, by Jordan Wilson

I read an article entitled, “Are You Saving Too Much for Retirement?”

I think it is a good article to discuss. No, the article itself is not good. Far from it. Rather this type of article is good to discuss. A big difference. 

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Assessing Investment Returns

On 06/19/2010, in Investment Concepts, by Jordan Wilson

In our first look at investment returns, we reviewed a few common return calculations.

If you know the formulas, the calculations are quite simple. The key is to know what is included and excluded from the different returns.

But even with the hard calculations, returns can mean different things to different investors.

Today we will consider some of the qualitative aspects in evaluating investment returns.

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A Little More on Diversification

On 06/14/2010, in Investment Concepts, by Jordan Wilson

Today we shall look at a few more areas of interest relating to diversification.

In An Introduction to Diversification, we saw that Investopedia recommends holding a “wide variety of investments” to benefit from diversification.

Further, that a diversified portfolio will generate “higher returns and pose a lower risk than any individual investment found within the portfolio”?

Is this true? What does it mean?

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Limitations of Standard Deviations

On 05/13/2010, in Investment Concepts, by Jordan Wilson

While standard deviations are indeed useful, be aware that there are limitations to their use.

Here are a few things you should consider before using standard deviations as a risk measure.

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Investment Risk in Greater Detail

On 05/11/2010, in Investment Concepts, by Jordan Wilson

Today we look at investment risk in greater detail.

This expands on our preliminary discussion in Defining Investment Risk.

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