Personal Finance & Money Stack Exchange
Personal Finance & Money Stack Exchange

Questions tagged [risk-management]

Risk management is the process of identification, analysis and acceptance or mitigation of uncertainty in investment decisions.

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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 me, and many others, away from the stock market. Before I explain it, let me mention some selected popular questions on this site in which the consensus is that in the long term a…
B K
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How can I protect my 401(k) when the stock market is performing badly?

I just opened my 401(k) at the beginning of 2017. In 2017 it did great because of the bull market, but since 2018 I've lost about $1,000. All of my contributions this year have been a complete waste. I feel like a lot of that could have been avoided…
thxz
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Why would long-term investor care about volatility?

I'm 35 and I want to start investing for my retirement. My question is, why would you care about volatility if your investment horizon is 30+ years? In order to get a more clear picture of volatility risk, I gathered some data in Python and computed…
Mark
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Are there risks or hidden costs of buying a CD from a bank I don't have an account with?

I'm the treasurer for my church and we have $100K saved up to replace the roof of the sanctuary. It'll be a year before we need the money, so I thought I should probably take the money out of savings and buy a CD with it. The credit union with the…
B. Goddard
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Risks of using home equity for high risk market investing

I bought a home after the market crash in 2009 and I have quite a bit of equity in it now (100k). I still have 20 years until I retire and currently my main brokerage account is very high risk / high return. I'm entertaining a 10/15 HELOC at 3% to…
Jacksonkr
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What should I do with the stock from my Employee Stock Purchase Plan?

I've got an employee stock purchase plan program. The details are a little tricksy, but I basically get to buy about 2500 shares of company stock at something like $2.33/share... and the stock has been trading around $12 recently (sometimes higher,…
user296
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Is there extra risk in owning an ADR vs. the underlying stock?

One of my favorite on-again-off-again recovery plays is Mittal Steel (NYSE: MT). I buy the MT ADR there (American Depositary Receipt) because I live in the US. Am I exposing myself to any extra risk owning the ADR instead of the underlying stock?…
John Shedletsky
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Can diversification eliminate risk or just reduce (i.e., mitigate) it?

In portfolio theory, diversification is often presented as a way to manage risk. However, does diversification completely eliminate risk or just reduce (mitigate) it? And how does this distinction apply to systematic and unsystematic…
StatsScared
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Worried about wife's spending habits with impending lump sum

My wife of 18 years has a problem with money. She has stolen from banks using my identity, falsified documents to get cars, and has been to prison over it. I pay for everything and give her whatever I have left over, which is very little. We…
user1049286
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Forex vs day trading for beginner investor

In essence, for a person that has not had any real experience with either (except for playing around in simulators like investopedia): which one would an individual have the most potential to realize capital gains with the least amount of stress…
rantsh
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Is the risk premium with insurance higher or lower than investments?

Insurance of any kind is always going to have a lower expected value than self-insuring. If there's a 10% chance of a loss of ₹100 occurring, insurance companies will charge more than ₹10, to cover their overheads and earn a profit. If you…
Kartick Vaddadi
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Does long term asset growth really converge to that derived from compound interest formula?

Many websites/experts claim that the longer you hold your assets, the likelier your asset's return is closer to that predicted by the compound interest formula. However, some other experts claim that this is wrong based on the Modern Portfolio…
Enno Shioji
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Should retail investors learn and use the capital asset pricing model (CAPM)?

I heard that the capital asset pricing model (CAPM) is commonly studied by finance students, and can help in controlling risk in stock portfolios. The CAPM looks rather complex as it seems to require knowledge of statistics (expectation, standard…
Flux
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Minimize risk of losing a lot of value for your savings during the corona crisis

Which investment possibilities are there for minimizing the risk that your cash savings (for simplicity let's say 100,000$) will severely lose value during the corona crisis? The focus is on avoiding high loss, not on little loss or even high…
DaveBall
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What are some signs that the stock market might crash?

I have about one year of experience as an investor and my goal is to aggressively grow my portfolio over the next 40 years for retirement. I have had good success achieving my goal over the last year but as my portfolio grows I'm beginning to feel…
Nosrac
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