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Risk is the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome). The notion implies that a choice having an influence on the outcome sometimes exists (or existed). Potential losses themselves may also be called "risks". Any human ...

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1answer
65 views

Where do Master Limited Partnerships (MLP) lie on the risk/yield spectrum?

MLPs are required to pay profits to their limited partners. Dividend stocks can choose to stop paying dividends. Corporate bonds payments are fixed interest (a set number) but MLP payments are usually ...
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1answer
41 views

How to estimate the profitability and risk of investing in rental properties?

There was a recent question, Is it a good idea, to buy a flat with a loan, whilst using the rent to pay it off?, which was closed due to asking opinion-based advice. However, the question can be ...
3
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3answers
95 views

Does a bond mutual fund qualify as “bonds” for the purposes of risk management?

I am re-balancing my portfolio to be a little more conservative. I am considering taking some of what's currently in equity ETFs and putting them into VBMFX, a "Total Bond Market Index Fund". Is ...
146
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24answers
49k views

Why do people save so much?

When I am old and retired (70 years +), I don't plan to spend a lot of money. I'll be living in my own house that is already paid off at that point, so no rent or mortgage payments. Since I don't need ...
23
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7answers
5k views

Does dollar-cost averaging just means taking risk later?

I am investing in mutual funds and hence reading and trying to learn about it. I was reading this answer which says lump sum investment is far more efficient than DCA. Well, that does not surprise me....
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2answers
162 views

Risks of selecting a pension plan in the USA

I am looking at a possible employment opportunity with a state-affiliated institution in the United States. They offer a couple of options for retirement plans, and one of them is a pension plan. Of ...
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3answers
145 views

Profit reached faster then expected, what are good sell / hold heuristics?

End of January I got my feet wet into a position and added to that same positions after noticing it was doing well 3 months after. 8 months into holding the value went up by 40%+ (no major news ...
1
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2answers
90 views

How to balance the risk of owning one real estate?

I am about 45 years old and recently began to receive a US government pension, which I do not require for current expenses. The monthly payment is about a quarter of my living expenses, but due to my ...
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0answers
22 views

Credit Valuation Adjustments (CVA) and how they work?

I am new to finance but have developed a deep love for the subject. One area of finance that I can't wrap my mind around is CVA. I understand the Definition but I can't seem to put that into a ...
0
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0answers
96 views

Are there speculative ETFs analogous to investment funds?

Are there ETFs that bundle up highly speculative investments with high risk/reward profiles? For instance, they might currently include Zambian, Nigerian, Brazilian and Venezuelan bonds; ...
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2answers
234 views

Why is there less buzz around IEP (Carl Icahn) than BRK.B (Warren Buffett)?

IEP is 95% owned by Carl Icahn. It most certainly passes the Skin in the Game principle Nassim Taleb likes to talk about. I happen to own a couple of shares in it because of the man's incredible ...
5
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8answers
692 views

Why are tech stocks risky investments?

I've seen this mentioned so much in writings about intelligent investing, but I don't understand why. Are Amazon and Netflix tech stocks?
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6answers
6k views

Why cannot LLCs be used to negate increased risks when doing leveraged investments?

Let's say that I am confident that some investment will grow by 15% per year, and that I have 10K to invest, and I'd like to use leverage to invest 100K. What stops me from creating an LLC with 10K ...
2
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0answers
85 views

Italy has the same cost of finance as the United States? [closed]

Conventionally, interest rates are thought to reflect market risk. Investors will buy riskier bonds only if the reward, the interest rate, is sufficiently high. The more risk, the higher the interest ...
5
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2answers
168 views

How to determine the right level of disability insurance based on a person's lifestyle

I'm trying to determine what level of disability insurance is right for me. A thought crossed my mind: certain people experience less risk of disability. A person who works from home is at less risk ...
1
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2answers
279 views

What would happen to stocks during war [closed]

Let's assume if U.S went to WW3 in far or near future. If it is the case what would happen to the stocks and companies? Will the stock fall enough to the point stock would just disappear? what about ...
-1
votes
1answer
179 views

How can I combine winrate, (risk/reward), and expectancy into a single formula?

winrate = wins / (wins + losses) I fiddled around with it and found that: requiredWinrate = risk / (reward + risk) Expectancy formula expectancy = (winProbability x averageWin) - (lossProbability ...
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2answers
124 views

How to mitigate 401k risk with bonds?

I’ve read that for 401k’s, you want to reduce risk as you get older and the primary means to do that is to move money out of stocks and into bonds. Assuming that principle is generally valid, then ...
2
votes
3answers
178 views

Should I spread my 401k investments across more than one broker?

After many years contribution, my previous employment's 401K account has more than 500K now. I don't like its plans which have less returns comparing with plans from other broker companies. I am ...
0
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0answers
82 views

Quiet Title Action after Tax Deed Sale (Florida)

Is a quiet title action necessary or still recommended when the previous owner whose property is sold trough a tax deed auction has obtained his property through a warranty deed with a clear title? (...
5
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2answers
531 views

Benefits of investing at different stages of the supply chain

Say that I believe that the market for electric cars will explode in coming years. What are the benefits/detriments of the following investments at various levels of the supply chain? Raw materials, ...
37
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15answers
12k views

Why does risk level matter?

In a perfect market, the extra losses of a high risk portfolio should exactly match the difference in returns between that and a low risk portfolio. In other words, a sufficiently diversified ...
0
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2answers
66 views

Ordering forms / areas of investment by risk

I have studied investing for a short while and would like to test my knowledge by asking a question about this ordering from lowest risk to highest risk of investment opportunities: Government backed ...
5
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2answers
241 views

Are mutual funds composed of bonds really as low-risk as the bonds themselves?

I live in the US. I often see advice that a retirement savings account should include a combination of stock mutual funds and bond mutual funds, with the relative weights depending on the years to ...
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1answer
1k views

Risk free rate formula breakdown

In risk free rate formula below why is 1 added on numerator and denominator and the value is substracted by 1 Rf = (1+nominal risk free rate)/(1+inflation) -1
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1answer
87 views

Funds managed by companies that go bankrupt?

With all the talk of Wells Fargo looking pretty shaky, what's the deal with people that have investments through them? It's their fund, but it's not really in them? What happens to holders of ...
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6answers
2k views

Losing Money with Norbert's Gambit

In attempt to avoid the usual 1.5-2% exchange fees levied by brokers, I perform Norbert's gambit: I purchase DLR.TO in CAD (Canadian dollars) from TSX, journal it over to DLR.U.TO, and then sell the ...
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votes
2answers
180 views

Is an Income Mutual Fund a good alternative to a savings account?

From what I've seen Income Mutual Funds, particularly an Index Income Fund, are relatively safe with a return greater than any 'guaranteed' return investment option. Obviously the actual return is ...
0
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1answer
3k views

What is the risk-neutral probability?

I discovered how to price European options and stumbled over a term and an equation I didn't understood : If we assume that investors are indifferent to risk and that expected returns on all assets ...
2
votes
2answers
194 views

Diversify across multiple brokers?

Right now my brokerage account has a non-trivial fraction of my total assets. It's all in a single account with Interactive Brokers. I know in theory customer funds and assets are ring-fenced, but ...
9
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3answers
3k views

Should I be worried that I won't be given a receipt if I pay with cash?

I'm getting an aftermarket accessory installed on my car by an individual. The person has actually been recommended to me by a big dealership in my area and this person seems to be pretty reputable ...
1
vote
5answers
803 views

How often do typical investors really lose money?

I know this is a bit too trivial for most of you, but please bear with me as I am a novice at this. My question is: How often does an investor lose money? What I know is: investors lose money by ...
0
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2answers
81 views

When buying a call option, is the financial stability of the option writer relevant?

A call option allows a person to buy a stock at some future date for a specified price. By implication, if it is "in the money" you'll be able to buy the stock at a potentially deep discount. So it ...
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9answers
3k views

Why do banks finance shared construction as mortgages instead of financing it directly and selling the apartments in a building?

The numbers in this question are for a developing country, so rates may seem high, but I tried to make them look reasonably related to each other to illustrate this question. The question also assumes ...
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1answer
158 views

What makes one smart and/or successful in investing? [closed]

Pretty broad question, but I hear these things thrown around a lot and was wondering if such a canonical or straightforward definition exists. To make this simple: What makes an investor "smart" as ...
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7answers
6k views

High-risk investing is better for the young? Why?

I have heard statements such as the question's time. Basically, it's a financial motto: "If you're young, take on more risk." I don't really understand it. I figured risk-tasking is a personal/...
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1answer
213 views

Why is “1” subtracted in the formula for nominal risk-free rate?

Nominal risk-free rate = (1 + risk-free rate) x (1 + rate of inflation) - 1 Why is one being subtracted at the end?
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8answers
8k views

As a 22-year-old, how risky should I be with my 401(k) investments?

As a 22 year old guy, how should I plan my financial life regarding my 401(k) investments? How much risk should I be taking? Also, is it a good idea to invest in a dynamic portfolio with smart beta ...
2
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3answers
171 views

Building a diversified portfolio at market high

I am a Canadian, setting up an ETF-based RRSP in Questrade. Right now I have 70% of my portfolio in Canadian bonds, the other 30% of my portfolio is in cash, in USD. I am modelling my portfolio after ...
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2answers
91 views

How to find out who manages funds?

So I am interested in a fund. I want to know if I can trust the people running it. I don't know however, how to find out who they are. I have thee name of the company offering the firm but no ...
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3answers
362 views

Does dollar cost averaging apply when moving investments between fund families?

We'll likely be moving ~$100,000 (two Roth IRAs, about 80k/20k split) from a mix of Nationwide funds to a combination of Vanguard whole-market stock and bond index funds (details below). All else ...
0
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1answer
80 views

How to evaluate ETF correlations regarding risk? [closed]

I have picked three ETFs, collected 5 year historical data and calculated the correlation of daily end prices. I calculated the following correlations: A B C A 1 B 0.77 1 C 0.49 0.72 ...
2
votes
1answer
76 views

Risk to Reward Ratio Calculation

I'm learning how to do a Risk/Reward ratio and want to make sure I am calculating this correctly. Let's start with a .92 per share of 500 shares purchase = $460. I expect the stock to increase by ....
0
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0answers
148 views

Thinking about opening a Stocks & Shares ISA- is it best to invest a lump sum, or make smaller regular payments?

I have some cash on which I am not currently earning any interest, and with savings rates as low as they currently are, I am thinking about investing in the stock market to try and make the most of ...
3
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2answers
165 views

How can risk-reward relationship exist, since the losses due to the risk should offset the reward?

While this should be very basic, the risk-reward concept does not make sense in my mind. I don't understand why the premium offered to offset the risk of an investment is not decreased, on average, ...
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2answers
276 views

Using Marine Traffic (AIS) to make stock picks?

I don't know anything about Gnuais, but satellite and terrestrial ship tracking? It's all over the place. https://www.ihs.com/products/ais-live-ship-tracker.html (just one example; there are many ...
4
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4answers
303 views

Should I invest everything in emerging markets ETF when I'm young?

Lifecycle investing is growing in popularity in the industry, where people in their 20s and 30s are invested into high risk portfolios (equities) and people approaching retirement are transitioned ...
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2answers
459 views

Are Exchange-Traded Funds (ETFs) less safe than regular mutual funds?

I have read this question on the differences between both vehicles, but one the points was, perhaps, a bit under-emphasized: the relative risk. I understand there are technical differences between ...
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4answers
3k views

What does a well diversified self-managed investment portfolio look like?

A lot of online blogs and investing material suggest that investing in a single index is not diversified enough to avoid some types of market risk. So the question then is, what does a well ...
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1answer
194 views

Is the risk premium with insurance higher or lower than investments?

Insurance of any kind is always going to have a lower expected value than self-insuring. If there's a 10% chance of a loss of ₹100 occurring, insurance companies will charge more than ₹10, to cover ...