Investment Risk FAQs
- Risk vs. Return
- Asset Allocation
- Diversifying
- Monitoring Progress
The first step in the investment process is to figure out what sort of Return on Investment (ROI) that you are seeking.
You can start by examining your trading records and ensuring that all of the trades went through at the prices that you instructed.
Keep tabs on how your assets are performing.
If they seem to be underperforming, you may want to change your investments to some that may be more lucrative. You may want to also check to make sure that the investments that you own are in line with your current investment strategy. Your strategy may change over time. Be sure to compare your investments to your current situation.
There are definite risks to investing, but educating yourself can drastically limit your exposure to these risks.
- When the rate of return is great, the risk usually is as well. Depending on the situation, you may put yourself at risk to lose all of your initial investment.
- There is a great difference in the liquidity of assets. Some can be sold in moments, and some may take quite a bit of time – take this into consideration when buying. Some may also have penalties for selling early or maturation dates.
- Investing in a company with little or no history is much riskier than those with a proven track record.
- The previous performance of a stock doesn’t necessarily mean that the stock will follow that pattern.
- Pay attention to news that pertains to the companies that you hold, information that is released about the companies in the news can seriously affect the values of the investments you hold.
- Always trade through your brokerage firm.
- Never make purchases from phone solicitations offering the next hot stock.
- Never send personal checks to a sales rep, always to the company.
- Always receive your monthly statements to double check that everything is correct and that there are no irregular charges.
- If any sales representatives attempt anything that seems out of place, contact the branch manager of the company.
Scarsdale accountant Paul Herman is here to help you with all your personal finance needs. Please contact us for all inquiries and to receive your free personal finance consultation!
Herman and Company CPA’s proudly serves Scarsdale NY, Rye Brook NY, Armonk NY, Tarrytown NY, Purchase NY, Stamford CT and beyond.
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