Never, is a bad word . But in fact many people invest and often turns into a bad situation .
Risk is a key concept here . We were raised to take the risk , because it is a wise action , while avoiding risk means a coward or narrow-minded .
Yes , profit is the real purpose of people to invest . But the profits to be gained seemingly must also consider the risk that lies behind it .
Like a ball game , whether to pass to a teammate who was in a crowd of opponents , or look carefully baskets , and get ready to do a shot 3 points . The best way of minimizing the risk is to recognize when these investments seem excited . Then grab origin without clear goals , do not do it .
Excerpted from Forbes . com , Thursday ( 20/02/2013 ) , here are 5 things that you realize that the investment is kept moving wildly :
1 . Large company stocks trimmed or below the target retirement fund .
You know this company forward and backward . Familiarity with your investment is not wrong . But if you are so inclined to have a bigger position than , say , a competitor ? What about the blue- chip Dow’s single ? If the answer is no , you probably should not have so much at stake here . Concentration risk is still a risk of concentration . You close the company did not reduce this risk .
2 . Small stocks of various types .
Having little cap is an important part of a balanced portfolio . In moderate doses ( according to the time horizon of your investment ) they can give you the advantage needed . But then, it would only bet .
3 . Saving 100 % investment in bonds .
Yes , you should have a stock , especially when you’re younger . Rising earnings translated into self-protection against inflation that appears in a long time . However, even young investors should have a small bond position and a mixture of non – equity assets such as commodities and real estate .
4 . Saving 100 % investment in shares .
Here , the problem is inflation . You know the fact that inflation is about 3 % or more in a long time . If the long bond paid a little more, you are guaranteed a loss . It might make you feel better that the bonds would , in fact , pay you back . But in this case why not just hold cash ? The bigger problem is selling bonds in the interest rate increases . If the new bond issue paid more , your old bonds will lose value and become more difficult to sell without taking a hit on the price . Bonds is the ballast in your portfolio , which is a useful counterweight , not retirement strategy .
5 . Being uninvested .
Whether you decide to save cash in the past year ? Too bad . You missed a double-digit rise in stocks last year . Financial advisors often pointed out, it only takes a day to see urang of stock trading can be the biggest move .
Too much confidence in our own ability to predict the general direction of the market is a widespread disease . One symptom of overconfidence is sitting in cash for for a long time .
Waiting too long can not only make you lose the opportunity , the more you can lower the purchasing power mainly when there is inflation .
Of the five examples of these cases , balance is the key
So what investment “ideal ” ? A balanced portfolio will include foreign and domestic stocks , various bonds , commodities , and real estate . Recovery restore balance is the key , stay on the market long enough to realize rebalancing can provide benefits for retired investors .
Asset allocation may reduce risk while allowing room for reward , through the normal up- and- down expected in a long time .