Category: Experienced Investors
I am a CPA Candidate sharing my experience building my portfolio while in my 20s. During this process of sharing information online I hope to increase free financial literacy access for all.
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What Are Defensive Investments That I Can Add to My Portfolio?
When market volatility is high, it’s crucial to know how to protect your portfolio. Defensive investments can help you achieve this goal by reducing overall risk. These investment types aim to provide steady returns or reduced volatility even during uncertain times. Defensive investments often include stocks from well-established companies, treasury bonds, ETFs focusing on stability,…
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What is Interest Rate Risk and Why is it Important?
Interest rate risk is the possibility that changes in interest rates will negatively affect the value of your assets or portfolio. This risk can impact both borrowers and investors, leading to losses when unexpected fluctuations occur. Imagine you have investments in bonds; if interest rates rise, the value of your bonds might decrease, as newer…
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5 Things to Know About Private Equity Before You Invest
Investing in private equity can be an appealing opportunity for many investors looking to gain exposure to private markets and diversify their portfolio. This type of investment involves committing capital to PE firms that buy and sell privately held companies or purchase public companies and take them private. Understanding the key aspects of private equity…
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Why Exposure to Private Markets Provides Better Portfolio Performance
Investing in private markets can significantly enhance your portfolio performance. Private markets offer diversification and can provide resilience during market downturns. By allocating assets into private equity, private debt, and real estate, you tap into sources of return less correlated to the public markets. Exposure to private markets enables you to optimize performance while managing…
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What is Tail Risk and Why is it Important?
Tail risk in finance refers to the risk of an investment moving beyond a certain point in the tail ends of a probability distribution. This kind of risk happens when there are extreme events that have significant negative impacts on portfolios. In finance, understanding tail risk is vital because it involves potential losses that are…
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What Is Systematic Risk for Investors?
When investing, you may often hear the terms “market risk” or “systematic risk.” These refer to the potential for an investor to experience losses due to factors impacting the entire market rather than just a specific company or sector. Understanding systematic risk is crucial because it can’t be avoided through diversification alone. Systematic risk, also…
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What is Idiosyncratic Risk and Why is it Important?
Understanding the different types of risk is crucial for anyone investing in the stock market. One type of risk that often confounds new investors is idiosyncratic risk. Idiosyncratic risk refers to the risk specific to a single company or industry, which can be diversified away, different from the overall market risk. For example, a sudden…
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What is Liquidity Risk and Why is it Important?
Liquidity risk is a crucial concept in finance that affects both individuals and businesses. Liquidity risk is the danger of being unable to meet short-term financial obligations, where assets can’t be quickly sold or converted into cash without a loss. This risk becomes evident during market downturns, sudden changes in market conditions, or when there is…
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How Does Bond Laddering Work?
Investing wisely in fixed income can be challenging, especially in fluctuating markets. Bond laddering offers a strategic way to manage your investments by staggering the maturity dates of multiple bonds. This helps you achieve regular income and risk management by holding bonds until they mature. Imagine having a series of bonds that mature at different…
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How to Grow Your Emergency Fund to 18-24 Months for Retirement?
As you approach retirement, ensuring financial security becomes crucial. One way to achieve this is by reassessing the size of your emergency fund from 3-6 months of expenses to 18-24 months. This larger cushion can help you manage unexpected costs without dipping into your retirement accounts prematurely. Retirement can bring about various uncertainties, including fluctuations…