Diversification is one of the fundamental tools in our arsenal of reducing risk and is the arguably the most important. Diversification is used in a portfolio (group) of investments in order to reduce the unsystematic risk level that was introduced previously. It is achieved by combining a series of investments together, such as those in [...]

There a number of differing types of risk that can affect your investments. While some of these risks can be reduced through a number of avenues - some of them simply have to be accepted and planned for in any investment decision. On a macro (large scale) level there are two main types of risk, these [...]

Once your risk tolerance, intrinsic and time value of risk have been derived you are able to use asset allocation in order to establish what are the best investments for you. Asset allocation is the process of deciding how to distribute your wealth among both different countries and asset classes for investment purposes. The asset [...]

Risk is composed of a two values – an intrinsic value and a time value. The intrinsic value is the amount of money that you have available to invest – the more money you have, the more risk you are able to absorb. This is a relativity concept that is motivated by being able to [...]

Put simply this concept tests the fundamental reasoning behind each individuals investments - Do you know what your personal risk tolerance is? Or the degree to which you will accept a certain level of risk for a given level of return. The risk-reward concept states that while your investment decision can reap fantastic profits, you must [...]