Reduce Overall Investment Risk
This guide explores how non-traded REITs, equipment leasing companies, and energy partnerships may provide greater diversification and reduce the overall investment risk of a portfolio of publicly traded securities.
your investment portfolio
with the right advice, you can broaden your investment horizons.
A traditional investment portfolio contains a combination of stocks, bonds, cash or cash equivalents, and the mutual funds or exchanged traded funds (ETFs) that invest in those asset classes.
But if you want your portfolio to help you meet your financial goals, it can’t just be any combination of assets: You need an investment strategy. That’s why, when you collaborate with a financial adviser, the adviser’s first task is to assess your needs as a client, based on a thorough review of your investment objectives, attitudes toward risk, and the amount you have available to invest.
Your adviser can then determine the appropriate investment mix, or asset allocation, for your portfolio. Part of this process is to provide a regular review and periodic reevaluation of your portfolio to see that it continues to suit your objectives and risk tolerance.
risk and return
once you understand the relationship of risk and return, you can make smarter decisions.
Investment of any kind comes with a certain degree of risk. From one perspective, the greatest risk that you may lose all the money you have invested, and more. But there’s also the risk that you may earn too little and have to scale back your financial goals.
In general, the risk of losing money on an investment rises as the potential return, or payoff, increases. On the opposite side, the risk of earning too little grows as the return decreases. Or, to put it another way, seeking higher returns requires taking higher risks.