Understanding Risk And Time Horizon
risk is something that most investors try to avoid. the riskier a stock is the more return there should be that compensate for taking on that risk. risk in investing is measured by something called standard deviation. it is a measure of how much the stock price swings high and low compared to its average price. a low risk stock will have small swings, and therefore be more predictable, but a risky stock is unpredictable with larger swings. risky stocks can be profitable as long as you get out during a high, but sometimes you are forced to take out during a low, and this is when you need to consider your time horizon. time horizon is the length of time you can part with your money before you need it again. if you have a long time horizon, you can wait out any large dips, so you can have more risky investments, but if you plan on taking out your money within the next year, you have a short time horizon, and you might be forced to withdraw during a dip. the shorter the time you have, the less risk you can take. this is why your financial adviser needs to know your time horizon, before they can choose the right investments.
- time horizon・・・計画対象期間
- part with・・・～を手放す