Investing in stocks is a risky business. There are some risks you have some control over and others that you can only guard against. Thoughtful investment selections that meet your goals and risk profile keep individual stock and bond risks at an acceptable level. However, other risks are inherent to investing you have no control over. Most of these risks affect the market or the economy and require investors to adjust portfolios or ride out the storm.
The 4 major types of risks that investors need to be aware of are:
Economic Risks
One of the most obvious risks of investing is that the economy can go bad. Following the market bust in 2000 and the terrorists’ attacks in 2001, the economy settled into a sour spell. For young investors, the best strategy is often to just hunker down and ride out these downturns. If you can increase your position in good solid companies, these troughs are often good times to do so. Older investors are in a tighter bind. If you are in or near retirement, a major downturn in stocks can be devastating if you haven’t shifted significant assets to bonds or fixed income securities.
Inflation
Inflation is the tax on everyone. It destroys value and creates recessions. Although we believe inflation is under our control, the cure of higher interest rates may at some point be as bad as the problem. Investors historically have retreated to “hard assets” such as real estate and precious metals, especially gold, in times of inflation.
Market Value Risk
Market value risk refers to what happens when the market turns against or ignores your investment. This happens when the market goes off chasing the “next hot thing” and leaves many good, but unexciting companies behind. Don’t get caught with all you investments in one sector of the economy. By spreading your investments across several sectors, you have a better chance of participating in growth of some of your stocks at any one time.
Too Conservative
There is nothing wrong with being a conservative or careful investor. However, if you never take any risk it may be difficult to reach your financial goals.
If you learn about the risks of investing and do your homework on individual investments, you can make decisions that will help you meet your financial goals and still let you sleep at night.
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2007-07-13 17:23:54
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answer #1
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answered by SWH 6
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There is no simple answer to your question, but one thing you could do is to invest in companies that you know. For example if you work for McDonalds, Yahoo, Exxon, or any public company and you are somewhat familiar with their business and how business is going for them, then it would be sensible to invest some money in the companies stock. This is opposed to investing is some company that you have never even heard of or know where they are from.
2007-07-14 01:03:03
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answer #2
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answered by BangkokBob 4
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to invest without a broker you must go through that particular stock company (DRIP) as for everything read the financial web sites and learn
2007-07-13 16:08:55
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answer #3
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answered by Anonymous
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Risk = profit opportunity. No risk = no profit opportunity. Stocks can be quite profitable and can be quite risky. You can't change that.
Brokers don't work for free.
2007-07-13 16:13:52
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answer #4
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answered by Ted 7
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Try
www.zecco.com
A broker with apparently free comissions
or
www.tradeking.com
very inexpensive comissions, and an alternative if zecco doesn't work for you for some reason.
Really your life will be much easier with a broker.
2007-07-13 20:09:14
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answer #5
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answered by Adam J 6
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You might want to first create a "practice" portfolio at http://www.top10traders.com - it's free - each month the site ranks the best-performing investors.
2007-07-14 02:44:10
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answer #6
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answered by Anonymous
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it quite is basically promoting a number of the inventory you purchased on margin. of direction you are able to sell inventory each time you opt for and use the proceeds to pay off your margin debt or the different price you like...
2016-09-29 23:10:29
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answer #7
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answered by dorthy 4
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