2006-08-12 14:13:39 · 4 answers · asked by Anonymous in Business & Finance ➔ Investing
It is wisest to have a diversified portfolio of investments. Including blue chips, foreign companies, a mutual fund that invests in micro caps (they have better research facilites than you do), t-bills, perhaps a few other mutual funds that specialize in certain select area.
All investments are subject to uncertainty and risk. Diversification can minimize some of the risk and uncertainty.
2006-08-12 14:44:02 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Balance is the name of the game. Like you shouldn't put all your eggs in the same basket, diversify your portfolio across debt, equity, commodities, etc.
In shares keep about 60-75% of your cash in established dividend paying firms across sectors and the rest in emerging or potential blue-chips (as per your risk appetite). The relative return from investing early in a succcessful firm with good management far outweigh the risks and that is the smart way to go.
2006-08-12 14:45:21 · answer #2 · answered by fistfull-of-$ 3 · 0⤊ 0⤋
It depends on your tolerance for volatility. If you have 20 year time horizon and you can stand to see your investment vary by 50 percent during that time then microcaps might be a good idea. Your return will probably be higher. If you cant deal with that then blue chips would be a better option.
2006-08-12 16:34:19 · answer #3 · answered by jeff410 7 · 0⤊ 0⤋
Micro-companies have a very high beta risk due to their smaller size (500 to 1000 employees). Check out this site for risk analysis: http://www.investopedia.com/articles/stocks/04/113004.asp
So much depends on their management, market niche, and innovation. Check wisely grasshopper.
2006-08-12 14:24:39 · answer #4 · answered by Freeway 2 · 0⤊ 0⤋