Continued from page 1
Risk is generally defined as return volatility, or
degree of ups and downs of returns. But there's more to risk than volatility. Risk and long-term reward are generally related. Risk is chance that your actual return will be less than you expected.
People sometimes think that a good return can be achieved with little or no risk. Unfortunately, that's impossible. To achieve your objectives, you need to assume certain risks and avoid others.
Your ability to handle risk is related closely to your individual circumstances, including your age, time horizon, liquidity needs, portfolio size, income, investment knowledge, and attitude toward price fluctuations.
What's highly risky to one individual may be no problem to another. Short-term fluctuations are not that relevant for long-term investors who have discipline, patience, and understanding to deal with them. Stock funds are actually less risky than money market funds for those with long time horizons.
Well-informed investors are far less likely to let risk get best of them. Those who understand various elements of risk are better equipped to enjoy a profitable long-term investment journey!
Copyright © 2005 I.E.C. Haramis haramis@greekshares.com http://www.greekshares.com
Ioannis - Evangelos C. Haramis was born in Greece in 1951. Studied Business Administration, Marketing and Economics in Greece, USA and in Belgium.
He has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank.
