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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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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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 ...
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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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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 ...
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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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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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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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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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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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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 ...
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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). ...
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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 ...
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Given wrong POS machine receipt, should I be worried?

I was shopping today and paid with a local bank debit card (not Visa, MasterCard or some international card, just an ATM card issued by a local bank). Normally there would be 3 identical receipts and ...
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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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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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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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158 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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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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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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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
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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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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, ...
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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 ...
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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 ...
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154 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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What do I need to know about investing in developing countries?

My wife is Sri Lankan and we have some cash assets there, but we both live in Australia. Sri Lanka has restrictions on taking money out of the country - essentially it looks like you can only take $...
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Who buys a weak currency?

Suppose I want to convert Zimbabwean dollars into US dollars. Who will buy the Zimbabwean dollars from me? That is, why would they ever agree to change their valuable US dollars into the less valuable ...
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Yield on municipal bonds versus treasury

I'm looking right now at the yields in Municipal bonds and Treasury bonds on Bloomberg: https://www.bloomberg.com/markets/rates-bonds/government-bonds/us and I see that yields on Municipal bonds are ...
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6answers
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How risky is real estate?

I have a friend who plans to retire by putting all of his money in local real estate. He makes a huge return on investment on the property he has now - something like 25%. Fundamentally, I think ...
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Is there any data on the degree to which confidential financial information is taken from trash and then used fraudulently?

This question is prompted by How to Safely Destroy a Large Quantity of Valid Blank Checks. For decades, I've put torn up confidential financial information into the garbage (not the recyclable trash),...
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Computing risk-neutral probability of spot rates

I am trying to use a binomial model to price options wtih bonds as the underlying security.If the current term structure is flat at 6%, but next year, I assume the one-year spot rate will be either 5% ...
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1answer
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Risks and threats in signing empty SSA-89 form

A financial institution is asking to sign form SSA-89 which is used for verification of the social security number assigned a person. This verification is requested by a third party. The third party's ...
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1answer
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How to properly tune insurance deductible/excess for risk appetite

We all know you can arrange a higher deductible (USA) or excess (UK) to pay a lower insurance premium. My question is, is there an established method to identify what is the optimal size of ...
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Holding shares of company filing for bankruptcy

I own few shares of PG&E and recently got an intimation from my broker regarding the chapter 11 bankruptcy filing by PG&E. However, I also see the stock price going up for some reason. I ...
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1answer
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What are the risks with investing in private real estate funds via Fundrise?

I recently discovered this real estate investment company, Fundrise, and after doing some research, I’m interested in investing with them. But I’m on the fence about the trustworthiness of their ...
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6answers
393 views

Rational risk-assessment decision framework: Should I buy health insurance?

Update: I've posted a sub-question on the math stack exchange to help answer part of this primary question. Sub-question: Toy problem: How much should I rationally be willing to pay for this ...
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2answers
359 views

Buying ex-local authority/council properties in the UK

What are the risks of investing in ex-local authority/council properties in the UK? I am referring to purchasing from a private landlord an apartment that was built by a city council for social ...
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2answers
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Investments for Higher Expected Returns

In general, investments carrying more risk and volatility provide higher expected returns than those with lower risk and volatility. A 1-year T-note will provide a guaranteed return of 2.6%, slightly ...
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Interest rate risk of bond that is held to maturity

While reading online about interest rate risk associated with bonds it stated that if an investor plans to hold a bond until its maturity then interest rate risk is insignificant since the final ...
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Why do some travel insurances exclude country of citizenship?

It seems that it is common practice among many (but not all) travel insurance companies to exclude country(ies) whose citizenship the traveler possesses (even if the traveler does not live in his ...
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1answer
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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
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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 ...
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3answers
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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 ...
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24answers
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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 ...
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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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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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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 ...
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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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294 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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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 ...

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