Step 8: Riskese in Under a Minute
Mark Hebner explains how investors in both traditional and non-traditional index funds are likely to be rewarded for understanding and shouldering stock market risk. In fact, the very reason investors can expect to earn a return is because of their exposure to risks. The key is to invest in those risk factors that have been shown to compensate investors and to diversify away uncompensated risks. Examples of uncompensated risks are stock picking, time picking, manager picking, style picking, and past performance chasing. So investors should just invest in a risk level that matches their risk capacity, rebalance their portfolio and hold on until they need the money.
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