ECONOMICS
RISK AND RETURN
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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create your investment plan
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understand your tolerance to risk
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share your investments ideas with others
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research all companies you are interested in
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Detailed explanation-1: -All investments involve some degree of risk and knowing their risk tolerance level helps investors plan their entire portfolio, determining how they invest. Based on how much risk they can tolerate, investors are classified as aggressive, moderate, and conservative.
Detailed explanation-2: -Investments with the potential for higher returns often come with a higher potential for sudden downdrafts or outright loss. With an understanding of your risk tolerance, you can create a strategy for your investments that will help you balance the worries of volatility with the potential for bigger returns.
Detailed explanation-3: -Risk tolerance is the amount of market volatility and loss you’re willing to accept as an investor. Determining your personal risk tolerance is perhaps the most fundamental step you can take in deciding what types of investments to make.
Detailed explanation-4: -Why is it important for you to understand your risk tolerance before you start investing? You should tailor your investment portfolio so that it assumes an amount of risk you are comfortable with.
Detailed explanation-5: -Draw a personal financial roadmap. Evaluate your comfort zone in taking on risk. Consider an appropriate mix of investments. Be careful if investing heavily in shares of employer’s stock or any individual stock. Create and maintain an emergency fund. More items