Questions tagged [risk]

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 endeavor carries some risk, but some are much more risky than others.

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3answers
204 views

Should I invest 50% of my savings (20K) into a family business?

Somebody in my family is proposing an investment opportunity. The deal is as follows. You put 20K and he is going to use it to sow rice, the return depends on the price per kg of rice but he tells me ...
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0answers
39 views

Has the loan of securities from a retail investor to a well-established US broker ever resulted in a financial loss to the retail investor?

Retail investors may opt to loan some of the shares to their brokers: In theory, one of the risks is that the broker and the collateral may have some issue, leaving the retail investor with a ...
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5answers
246 views

If options gives you the RIGHT but not the OBLIGATION to exercise them, then why are they being forcefully exercised if they expired in the money?

Now, I know what you're thinking. If it's in the money, isn't it good that your broker automatically exercise the options for you on expiration date? Well, yes and no. If you somehow managed to miss ...
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1answer
56 views

Is it possible for a stock that is consecutively trading above $1 to get delisted?

Is it ever possible that a stock that is consecutively trading above $1 to get delisted? If so, how, and for what reasons? And if it happens, how often does it happen?
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5answers
4k views

Risks of using home equity for high risk market investing

I bought a home after the market crash in 2009 and I have quite a bit of equity in it now (100k). I still have 20 years until I retire and currently my main brokerage account is very high risk / high ...
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1answer
84 views

Can a risky asset have negative beta coefficient?

I have a question from my tutorial asking whether Can a risky asset have negative beta coefficient? I can only think of how this is possible only if risk-free rate is more than the expected returns, ...
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2answers
115 views

When buying an insurance policy, is it necessary to analyze the credit risk of the insurance company?

When saving money in a bank, one does not have to worry about credit risks of the bank because there is deposit insurance. When buying insurance, do I have to worry about the credit risk of the ...
4
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2answers
238 views

What is the most risk-free way to invest a lump sum of cash for 1-2 years? [duplicate]

I received a signing bonus with my most recent position for which, if I leave the company after one year I must return half, and can keep the entire amount if I stay two years. I am a very risk-averse ...
28
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9answers
5k views

What are the options to beat the returns of an index fund, taking more risk?

I am young, and will start my career in about three years. I do NOT live nor have any intention of ever moving to the United States, and I will probably be based in Europe for my career and after (...
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1answer
697 views

Should retail investors learn and use the capital asset pricing model (CAPM)?

I heard that the capital asset pricing model (CAPM) is commonly studied by finance students, and can help in controlling risk in stock portfolios. The CAPM looks rather complex as it seems to require ...
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1answer
2k views

Moving a 401k balance to multiple FDIC-insured IRAs to protect my funds against being wiped out by a market crash?

My wife and I are living on our Social Security benefits. I've been very pleased with the growth of my Fidelity 401k in my former employer's retirement plan. As far as I know, I can leave my balance ...
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1answer
79 views

Is an issuer risk free financial product secure if the bank holding it goes under?

When purchasing ETFs or other financial products, I only choose finance products that are "issuer risk free", which means that in case the institution that sells these products goes broke I ...
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2answers
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What kind of stocks are riskier than average?

What kind of stocks are riskier than the 'average' stock, and thus should be avoided? Please articulate the reasoning as much as possible.
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2answers
201 views

Are government bonds really risk-free?

When I read finance textbooks, I read things like "assume that the risk-free rate is equal to the yield on 30-year government bonds", "the government bond earns at the risk-free rate&...
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4answers
1k views

401(k) opt out Company matched funds allocated

Based on the current volatile climate unfavorably forecasting the future of brick and mortar retail stores facing continued lost revenue, the unprecedented growth of eCommerce, and to further damper ...
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0answers
41 views

What are the implications of ETFs lending out their holdings?

I've noticed some ETFs describing how they can lend out their holdings, usually for some amount of collateral (cash, U.S. government securities, stand-by letters of credit, etc). If we take GDX, for ...
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2answers
161 views

How would the discovery of El Dorado impact the price of gold? [closed]

I have gold in my long-term investment portfolio and I am worried about sudden over-supplies of gold. If a City of Gold (e.g. El Dorado) or the Nazi gold train is discovered in the future, how can I ...
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0answers
39 views

When to use Macaulay Duration / Modified Duration / Dollar Duration?

So I am sort of aware of how to calculate those numbers, but I am not quite sure, when to use which Duration? It's for a corporate finance class if it matters. Duration: determine the approximate ...
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1answer
223 views

Constructive and relatively safe investment options

I'm a single, a grad student, and have some personal savings. Saving money is in my character, and for the last 5 years, I've been saving 1/8th of my monthly income, on average. In the future, I know ...
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0answers
34 views

Have changes to mortgage standard variable rates ever diverged much from changes to base rate?

Historically, although SVRs tend to be a few percent above base rate, has any lender's SVR ever made a drastic change that wasn't caused by a change in base rate? This is in the context of risk of ...
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0answers
37 views

Understanding overnight debt fund portfolios

I'm trying to understand the differences between overnight funds and a bank savings account or fixed deposit in terms of safety. These are both common ways to park money for short periods. I know that ...
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1answer
55 views

Legal owner of funds and ETFs underlying assets and risks associated with it

If you invest in a mutual fund, you aren't actually the owner of the assets, the fund is. Is this different in the case of ETFs? Is the investor the legal owner of the corresponding ETF's underlying ...
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5answers
395 views

How to best make 100k EUR from 20k EUR within in 18 months [closed]

We will need around 100000 EUR by the end of 2021. We are willing to invest 20000 EUR. So how would we quintuple our funds within 18 months? We are aware that this is a high-risk undertaking and that ...
5
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1answer
481 views

Minimize risk of losing a lot of value for your savings during the corona crisis

Which investment possibilities are there for minimizing the risk that your cash savings (for simplicity let's say 100,000$) will severely lose value during the corona crisis? The focus is on avoiding ...
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1answer
85 views

What happened to LTCM (Long-Term Capital Management)?

I recently learned about the LTCM fiasco and I find it ludicrous. From Wikipedia: Initially successful with annualized return of over 21% (after fees) in its first year, 43% in the second year and ...
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1answer
30 views

How market regulations in different countries affect to the investment risk [closed]

There are some countries that have less market freedom than others (see Index of economic freedom by countries. Let's take into account only developed countries (USA, EU, UK, Australia etc.). Do ...
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1answer
67 views

Are funds in 403b accounts and Social Security secure in the event of a depression?

Are funds in 403b accounts in the event of a national depression, such as in the 1920s, secure, or are they lost? And since a depression involves the whole nation, Social Security will end, correct?
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0answers
47 views

Are uninsured financial institutions riskier places to keep my wealth, now that cryptocurrencies make embezzlement easier?

Suppose that one or more high-level officers at a stock brokerage, or other retail financial institution, decide to embezzle most of the assets held there. The embezzlers liquidate the assets into ...
2
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1answer
64 views

how to derisk amazon affiliate business (physical product delivery in hundreds of niches)?

We have a small business where we publish content online and make revenue from amazon commissions. Someone buys something using our affiliate links, then amazon pays us commission of 1-5%. It ...
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1answer
99 views

Should I worry that an online broker I buy securities from might not be in business when I want to sell them?

I would like to buy ETFs via an online broker in Denmark that is not affiliated with the bank that manages my regular deposit. Is there a possibility that this broker might not be in in business ...
61
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10answers
12k views

If a broad long-term investment in the stock market is such a good deal, why don't banks do the “obvious” things?

There is a fundamental discrepancy or paradox that has been keeping myself, and many others, away from the stock market. Before I explain it, let me mention some selected popular questions on this ...
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1answer
118 views

Is the convertible bond arbitrage strategy really riskless if share price rises a lot?

Convertible bond arbitrage is a position when one goes short the company's stock and long the company's convertible bond. I have found many articles on the Internet stating that this is a riskless ...
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2answers
85 views

Is there a rule of thumb for percentage of liquid holdings to put on a risky investment?

If I, 24 years old living in the US, believe in a risky investment, say identifying a severely undervalued stock or going long on a put option, is there a rule of thumb for how much I should be ...
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2answers
159 views

how can you calculate the sweet spot for a risk / reward ratio in a partnership

Let's take 2 parties, A and B. A has a tool that can raise the value of an investment by a known quantity (Q) with an estimated risk factor (R). A failure would incur a loss of (L). B has money (M) ...
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2answers
379 views

How safe are neo-banks?

In Australia there are a swath of 'neo-banks', banks that have no physical presence - typically are a 'mobile-first' experience. Some examples are Up, Xinja, 86400. These banks are typically pretty ...
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1answer
40 views

For a mutual fund - if jensen's alpha keeps increasing with time, then how does beta of the mutual fund get impacted with time?

I am building an excel model to calculate rolling alpha at a monthly level to analyze different equity mutual funds. Along with the rolling alpha, I am also calculating rolling absolute returns and ...
0
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1answer
47 views

Is it necessary to have different asset allocation for short-term needs?

I'm in my early 20s and have 60K in retirement accounts and 80K in taxable accounts. Both are invested in low-cost mutual funds, 80/20 stock/bond split (specifically 60% VTSAX, 20% VTIAX, 20% VBTLX). ...
3
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2answers
274 views

Is there any risk in keeping lots of assets with one broker? [duplicate]

I'm in the USA. Currently, the bulk of my net worth is in accounts with TD Ameritrade. Right now, that's only about $30,000, but I plan to keep contributing; hopefully in a few decades, I'll have a ...
2
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1answer
180 views

Outsourcing rental risk: selling right to rent house?

I am wondering whether there is a way to get rid of the risk associated with renting a property one owns by selling the right to rent that property for a certain period? I am especially interested in ...
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2answers
162 views

Is it safe and smart to keep all your money in SAVINGS account in India? [closed]

I am a Software Engineer by profession and passion. I am facing problems with chosing how shall I invest my money. I have worked for 3 years now, and have around 40 lacs INR total earnings which I ...
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6answers
13k views

Is putting money in a 401(k) plan risky?

I've been working for a company that offers me a MassMutual 401(k) plan as a benefit. The employer's match is 50% of my contribution. I've contributed 3% of my gross salary to the plan, and planning ...
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2answers
160 views

How to enter an order to buy or sell stocks with the intent to cancel without risk?

There was a market crash in 2010, in that it is alleged that the scammer entered the sell orders with intention to cancel. With my experience, once I enter an order( limit or market) with a ...
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1answer
76 views

Would deflation further stress the Federal Government's Balance Sheet? Would this put in peril Debt payments and Social Security benefits?

I would like to know if deflation would represent a risk to Debt (bond) payments and Social Security benefits. To my understanding, Social Security is only indexed when there is positive inflation. ...
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4answers
262 views

Is high return and low risk possible?

In finance, we often see that high return instruments should be accompanied by high risk. Is it possible to have a high return and a low risk financial instrument?
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0answers
57 views

Options trade - statistically expected return calculation?

I also asked this question here, for it to get more visibility. I am calculating expected return for composite option strategies based on event probabilities provided by the broker. For example, ...
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4answers
3k views

How invisible hand adjusts stock prices if company is listed on multiple exchanges, under multiple currencies, and one of the currencies plunges?

I'm an absolute beginner in economics and in the stock exchange and just encountered my first company that was listed in multiple stock exchanges and in multiple currencies. I'm aware of the invisible ...
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2answers
2k views

Is it risky to move from broad geographical diversification into investing mostly in less developed markets?

I currently invest in a handful of index funds that includes U.S. equities, U.K. equities, some emerging markets, and some Asian equities. But I have in mind that the West is eyeball deep in debt, ...
3
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3answers
485 views

Should we consider real estate investment low, middle or high risk?

Should private investors investing in a specific (that is, not through some fund) real estate treat it as low, middle or high risk? Issues I consider: It's true that things move slowly in real ...
0
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1answer
73 views

Franchise expected survival/failure rate [closed]

What are good stats about the rate of survival/failure of franchises? I get to hear that McDonald's restaurants tend to live longer than Subway's, but don't know how reliable that is. Around me, I ...
0
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2answers
157 views

Lowering mortgage downpayment vs Investing in stocks? [duplicate]

I live in a country where currently mortgage interest rates are historically low (around 3-4% for 300K 30 years mortgage, and the interest is also tax deductible), and the banks are willing to finance ...

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