If you are not a professional in the investment industry, and sometimes even if you are, it can be difficult to evaluate the ins and outs of any particular investment. Deciphering the fine print, especially when it comes to evaluating risk, can be especially difficult.
Janet Kim Sing
Diversification is one of the best risk-mitigating strategies people can employ in their portfolios. Mitigating risk is the sensible choice and including investments that are not correlated to each other is one way to accomplish this.
Maria Dawes
As we've discussed in previous posts, risk is a broad measure requiring context-based evaluation, with overall risk reflecting the combined impact of various factors, so in assessing a client’s risk tolerance, we use a multi-pronged approach that goes beyond a simple questionnaire.
Any time you invest money, you should be expecting some kind of return. The cost of this return is the risk that you’re taking: many investors would suggest that the greater the risk you take, the higher the return you should be rewarded.
Standard deviation, or volatility, is a popular, easily quantified risk measure used to classify investments from low to high risk; however, focusing solely on volatility gives an incomplete view of an investment's risk.
Talking about risk can be tricky, as there are so many different categories of risk. This is why we are just choosing to highlight a few categories today.
If you have ever been in the market for a home, you have likely gone through the experience of having to make some concessions on your wish list. Similarly, when finding a Portfolio Manager and/or Investment Firm it is likely that there will be something that you are not overly excited about and that is completely normal. I would even go so far as to say that if everything seems too perfect, that is a red flag!
Meeting with prospective Portfolio Managers or Investment Advisors can initially feel intimidating, particularly if you have limited investment experience. But really, this should be a bit like a job interview that you are conducting. Since you are delegating this part of your financial life to someone else, your values and priorities must align.
One of the first questions you should be asking in your initial meetings is what professional license or oversight body a firm belongs to, if this has not already been disclosed or isn’t clear. There are, in fact, several regulatory bodies that exist. Make sure that you know which one the firm in question falls under and what that means.
