http://www.1stMillionAt33.com/2008/01/controlling-the-risks/ A site to share my tips, tools, and humble thoughts on the journey to wealth Tue, 27 Jul 2010 22:24:37 -0700 http://wordpress.org/?v=2.8.5 hourly 1 http://www.1stMillionAt33.com/2008/01/controlling-the-risks/comment-page-1/#comment-3725 Llama Money Mon, 07 Jan 2008 22:11:53 +0000 http://www.1stMillionAt33.com/2007/01/controlling-the-risks/#comment-3725 I won't put any / much money into bonds until I'm much, much older, and closer to retirement. Until then I can afford the risk that stocks have, so that I can reap the returns that I'm looking for. I'm as calm as they come, but you're right - it's hard to see a big dip in any investment. It takes a strong stomach, to be sure. I won’t put any / much money into bonds until I’m much, much older, and closer to retirement. Until then I can afford the risk that stocks have, so that I can reap the returns that I’m looking for. I’m as calm as they come, but you’re right – it’s hard to see a big dip in any investment. It takes a strong stomach, to be sure.

]]> http://www.1stMillionAt33.com/2008/01/controlling-the-risks/comment-page-1/#comment-3718 Eric Toya Thu, 03 Jan 2008 17:01:38 +0000 http://www.1stMillionAt33.com/2007/01/controlling-the-risks/#comment-3718 As they say, markets are not hard to own, but the difficulty is to stay the course. A thought on risk and asset classes. The other reason we own lower expected return assets is for the dissimilarity of price movement in asset classes which reduces volatility. So, the important factor is not that large caps have a lower expected return and a lower standard deviation, but that they may move differently from small caps, thus reducing total portfolio volatility. Now that people are living 30+ years into retirement, it is still important to take a long term approach to investing even during retirement. However, when a distribution is being taken, reducing volatility is as important for the portfolio as total return. As they say, markets are not hard to own, but the difficulty is to stay the course. A thought on risk and asset classes. The other reason we own lower expected return assets is for the dissimilarity of price movement in asset classes which reduces volatility. So, the important factor is not that large caps have a lower expected return and a lower standard deviation, but that they may move differently from small caps, thus reducing total portfolio volatility. Now that people are living 30+ years into retirement, it is still important to take a long term approach to investing even during retirement. However, when a distribution is being taken, reducing volatility is as important for the portfolio as total return.

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