Your tolerance for investment risk is a relative thing. Few people like investment risk, but some can handle it better than others can. The more investment risk you are willing to tolerate, the higher your potential expected investment returns and investment growth. At the same time, the investment road you take might be rougher.
Securities markets tend to pay a return on investment only for shouldering investment risks at the market level. The cash, bond, and stock financial asset classes have different expected risk and return characteristics.
Financial asset allocation is the apportionment of your investment portfolio into one or more of these classes of market-traded financial assets. How you allocate major portions of your assets among the primary financial asset classes determines your portfolio's overall exposure to investment risk and thus your potential for investment growth.
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