Ignoring Risks
December 28th, 2007
What is the biggest risk you fear?
Most people would say the biggest investment risk of all is losing investment principal. However, there is one bigger and scarier risk; The risk that we won’t accumulate enough investment capital and we will outlive our money during retirement.
When investing smart, these two risks should always be viewed together when deciding any investment strategy, but far too often investors are not investing smart and forget to weigh the biggest risk of all, and its affect on their investment goals. Don’t make that mistake they do – use risk management techniques.
Use Risk Management techniques
Risk management is key to Smart Investing. All investments have risk – some risk are higher than other risk. Risk free investments are very rare, so if you are Smart Investing, you should employ some risk management strategies to ensure that your investments are as safe as could be.
Asset allocation as a risk management tool
There are many risk management techniques. Asset allocation is one of many risk management tools as opposed to Market Timing. For example, to avoid outliving your retirement money, you should employ some asset allocation and other risk management strategies in your individual retirement plan or IRA or other tax advantaged retirement plans.
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