Tehachapi's Online Community News & Entertainment Guide
Tehachapi's Online Community News & Entertainment Guide
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Beta A better method of measuring risk is referred to as beta. Beta measures an individual investment’s volatility in relation to the stock market in general, as measured by the Standard & Poor’s 500 Stock Index (S&P 500). The S&P 500 has a beta of 1. A security whose value goes up and down 25 percent less than the S&P 500 has a beta of 0.75; in other words, it has historically had less volatility than the market as a whole. A security whose value goes up and down 25 percent more than the S&P...
Determine your investment time horizon The period of time for which you plan to stay invested in a particular vehicle is referred to as your investment planning time horizon. Generally speaking, the longer your time horizon, the more you can afford to invest more aggressively, in higher-risk investments. This is because the longer you can remain invested, the more time you’ll have to ride out fluctuations in the hope of getting a greater reward in the future. Of course, there is no assurance t...
What is risk? In the investment world, risk means uncertainty. It refers to the possibility that you will lose your investment or that an investment will yield less than its anticipated return. Simply stated, risk is the degree of probability that an investment will make or lose money. When evaluating risk, there are two important elements to understand. The first is the investor’s own ability to tolerate risk, and the second is the risk of the investment itself. Why is it important (risk vs. r...
