Instructions

Cut stock weighting. The easiest way to reduce the risk of loss is to move investments from stocks into assets such as bonds or short term cash accounts. Compared to stocks, government, corporate and municipal bonds are safer in preventing serious loss. Bonds amount to interest-bearing IOU’s. Cash accounts are the safest of all. Understand that weighting the portfolio toward bonds or cash accounts also generally means a lower rate of return on your investments. From 1926 to 2007, a portfolio of 80 percent stocks and 20 percent bonds yielded an average of 9.7 percent annual growth. A portfolio of 40 percent stock and 60 percent bonds yielded a 7.9 percent return.

Shift your stock mix. If a particular segment of the market is in a slump, consider moving money out of stocks which are most vulnerable and into stocks with a stronger outlook. The problem, of course, is recognizing which stocks are vulnerable. Smaller companies often feel the pinch sooner and more deeply than larger, well-capitalized companies. Large-cap growth stocks usually weather market slumps better than small-cap growth companies. Look for large, strong companies that have gone through difficult market trends before and have come through successfully. Historical data is helpful here (see the Resources section below for historical stock charts).

Resources

More Like This

Investing in Stock vs. REIT in IRA & Dividends

How to Enter the Penny Stock Market

How Are Annuities Guaranteed?

You May Also Like

Portfolio risk is the possibility that an investment portfolio may not achieve its objectives. There are a number of factors that contribute.

A well-balanced investment portfolio is one that seeks to balance risk. REITs can be bought and sold like stocks but provide.

How to Minimize Financial Risk. A risk to your finances can result in not having enough money to pay expenses, expand.

How to Minimize Financial Risk. A risk to your finances can result in not having enough money to pay expenses, expand, invest.

Balancing a Portfolio;. contacts within his particular industry and a diverse investment portfolio to minimize risk. Venture. venture capital firms.

Balanced portfolio theory, sometimes called modern portfolio theory, seeks to maximize returns while minimizing risk through the creation of portfolios that include.

The best way to minimize the risks of stock ownership is by doing a lot of research when first purchasing the stock.

How to Minimize Investment Portfolio Risk. There are times when an investor should consider re-balancing her portfolio to minimize risk.

What to Put in a Portfolio. As a result, you minimize the risk of losing a large portion of your investment.

No one likes seeing the value of their investment portfolios fall. There are ways to manage risk that can minimize the chance.

When creating an investment portfolio, consider what the risk tolerance is and the time horizon. An Investment portfolio is a combination.

In the world of finance and investments, risk is measured with the statistical measure standard deviation, which is the square root of.