I understand how derivatives work. I want to know other methods / unique ways of applying derivatives to hedge exposure to a particular investment.
see article called "How can i manage financial risk?" on http://www.howtotradeforeigncurrency.com/forex-blog/how-can-i-manage-financial-risk-
To obtain strong project outcomes by implementing an appropriate risk management process
Duration : 0:20:37
http://www.tripletradingprofits.com
While Stuart McPhee was visiting New York to present at the Traders Expo (Sunday 22nd February 2009) he stopped by ground zero and reflected on recent events and how they relate to trading and financial risk management.
One of the ways with dealing with the challenges of financial risk management is placing everything into perspective.
http://www.tripletradingprofits.com
Duration : 0:5:30
What’s the difference between these two? Actuarial science is about reducing the adverse financial impact of random events occurring. Risk management is a much broader considering many sorts of risks is it ?
Actuarial Science is actually broader than Risk management. Actuarial science involves, besides the risk management part, also the investments(how to get a better investment).
Actuarial Science also involved other statistics such as mortality studies.
I studied before
CIvilizations and groups have used risk management techniques and strategies for millenia. In fact, civilization itself is a form of risk management. So why then do conservatives and especially libertarians despise risk management so much; especially when they themselves employ, use and benefit from it?
And how does an attidue of "lets pool risk when it helps me but not when it helps you" equate personal responsibility in the minds of some?
It sounds like you need to learn what the term ‘risk management’ means.
For example: the idea of ‘pooling risk’ is an example of the risk management stragety called ‘transfering risk.’ The most common means of transferring risk is to contract with another entity to insure against the consequences of the risk.
Another method of risk management is called ‘avoidance.’ An example here would be to move a building at risk of flooding to high ground.
Also you have to remember that there is also a stragety of managing risk called ‘mitigation.’ Mitigation does not prevent the adverse event from occurring but instead minimizes the damage/consequences. An exampe here would be fire alarms, fire sprinklers and training your employees in how to respond to a fire.
And finally there is the risk management technique called ‘acceptance.’ This is where you simply accept the fact that an adverse event may occur but take no action. An example of accepting a risk would be when a company decides that the cost of preventing the loss of something is less than the cost of replacing it. An example here would be pens and other low value office supplies.
In fact your own example appears to be based on the idea that people and orginizations use the stragety of acceptince of risk and hope that the government will bail them out from the adverse consequences if the risk is realized. This is not ‘risk management’ as much as it is not being responsible.
In summary – conservatives and libertarians are more likely to employ risk-management strageties as they are more likely to accept rresponsibility for their own situation. Liberals are more likely not to use risk-management strageties as they will hope to get bailed out by others.
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A short presentation on managing your
risks when trading. Learn more at http://www.gnutrade.com.
Duration : 0:4:24
Wanting, hoping & wishing for more money is something we all do and at some point in our lives it can and does happen; from a win on the lottery to an inheritance, pay rise or gift the next question is always: what to do next? Will it be spend, spend – holidays, cars – or should it be save, save, save. Devil or angel? Your heart or your head? However, does it have to be such a stark choice – can you spend and still have enough to maintain a lifestyle without worry – of course so long as you remember two golden rules from the master himself, Warren Buffet: Rule one is “preservation of capital”, rule two “never forget rule one” They apply whether you decide to handle your financial affairs yourself or employ a professional. So what are the basic rules of investment and how do they work?
First you must understand yourself and, in particular, your view of risk. What does this mean? It means being honest with yourself and how you view both money itself and risk. Your values and beliefs about these will have been established at a very young age, primarily via your parents and those closest to you. If your view of high risk is to lose £100 in an investment decision, then I would suggest that you have a very low risk threshold. Alternatively if you are happy investing £250,000 in a new business venture and can sleep easily, then your risk threshold is high. Both views of course, have to be measured against your overall wealth. You can establish your own “risk profile” by completing any of free online personality tests such as those found at www.similarminds.com. If you decide to use a professional adviser this is the first thing he or she will try to establish. Put simply, they will try to understand the limit of your comfort zone where money is concerned, as well as your long term financial goals and objectives.
Many of the financial markets are extremely volatile, and prices can move significantly on a day to day basis. The US market for example is considerably more volatile than the UK market. For example, a share in the FTSE 100 can move up to 10p in a day whereas a share in the equivalent American market can move one dollar or more (60p) – i.e. 6 times as much per day. You’ve now taken the test and spoken to the experts what next? What will be the key to your success? Diversification or, put more simply, spreading it around will be key, because that is what the successful boys, and increasingly girls, do. It is simple common sense – you do not put all your eggs in one basket as this is asking for trouble. If you had £100,000 to invest, you might put 15% into shares, 10% in premium bonds, 25% in Government Bonds, and the rest into property. Most millionaires are risk averse, they just manage their risk better by preserving their capital, diversifying to spread the risk, and using sound money management techniques. Perhaps this is why they are millionaires!! Just watch Dragons Den and see how careful they are.
Once you have established your risk profile, and accepted that in order to increase the value of what you have it will be necessary to trade and invest, what markets or investments should you choose? Property, pensions, shares, bonds, unit trusts, options, derivatives, precious metals, currency, the list is endless. It all sounds very complicated and intimidating. In fact it doesn’t have to be. There is no reason to feel threatened or intimidated because by asking simple direct questions everything can be explained very easily and in a non patronising way. Remember this is your money and these are your dreams; never, ever invest in anything you do feel comfortable with or fully understand. If it can’t be explained clearly and simply or it keeps you awake at night, you shouldn’t be in it!!
anna coulling
http://www.articlesbase.com/investing-articles/investing-for-beginners-91977.html
I am a CA inter from India. I need to start off a career in financial management and my aim is to be a fund manager. My total work experience in the audit department of a bank is of 10 months and no other experience.
There are various courses (for example: http://www.theirm.org/courses/COcourses.html) on risk management. You could start by getting a job in the insurance industry, they often send staff on free courses in risk management.Otherwise you’d need to research the risk management diplomas and certificates available in your country.
Other sources:
www.edwel.com
www.learningtree.com/courses/286.htm
Managed investment funds are designed to offer the potential for high returns. Using some of the world’s leading investment managers, WealthCap funds aims to deliver high returns and diversification. WealthCap funds are long term investments, each of which is designed to build a diversified portfolio, with funds covering a range of asset classes, management styles, sectors and geographic regions.
Professionally, managed investment funds pool money of numerous investors (for example, unit trusts and insurance bonds). Money is what everybody is running after. It is the only thing that people seem to be bothered about. People are not satisfied with what they have and there is a constant strive to earn more. And once you acquire these funds, the next question that strikes you is: what to do with this money?
That is the irony of the situation. Hence, the only other alternative that is left if you do not consider hoarding and splurging is investment. Be it real estate, property or the stock market, people invest their money in these things, which ensures them a fair amount in return.
Managed investment funds is when many people pool in their money in a single investment to acquire assets of high value, but the ownership remains with one individual. We will now assess the benefits and the risk factors associated with managed investment funds for the benefits of most who have heard about managed funds but do not exactly know what it is.
Benefits of Managed Investment Funds:
The main benefit of managed investment fund is definitely that it provides a platform to the investor to invest in areas, which probably he would have never given a thought. With professional help at hand, one tends to be more relaxed while investing, since expert professionals back them. There are innumerable funds, which are present in the market each tailor made according to the preferences of individuals and thus one can pick and choose among the funds. Some of these funds are a little riskier than others, but the very fact that these funds ensure a constant income over the years coaxes the investor to pool in his monetary resources.
Investment management has assumed high [popularity in Australia now days. Be it Sydney, Brisbane, Melbourne or Perth, you will find people curious about investment funds.
However, the greatest advantage of these funds is the professional help that one gets from these funds. They have good contacts with people outside the firm and have access to information, which helps them take timely decisions, in favor of the investment by investors. In case you are among the ones who are interested in investing in these funds, go ahead, but read the risk factors carefully before investing.
For more details please visit www.wealthcapfund.com
Mark Plummer
http://www.articlesbase.com/investing-articles/managed-investments-funds-offer-high-returns-135387.html
According to the Cashflow quadrants by Robert Kiyosaki, I will need to switch to either a business owner or an investor to become wealthy. If I were to choose the path as an investor, I realized that there are certain responsibilities that I need to fulfill.
What are the responsibilities?
To answer this question, let use the example of investing in mutual funds.
As we all know, fund managers managed mutual funds. They are expert and more qualified than the average investor in stock investment. Thus they are in a better position to make money from the stock market.
Another advantage of mutual funds is that there is diversification to reduce risk. The amount of money is pooled to invest in different stocks, thus achieving diversification. These are the two selling points of investing in mutual funds.
When I initially started to invest in mutual funds, I never do any detailed research. Like most people, I simply invest in a mutual fund that I think it will make money. The decision is usually purely based on the information presented by the sale persons. Happily, I invested and forget about it. I felt that since the expert fund manager is managing my investment, I had nothing to worry about. And I never really monitor the performance of the mutual funds.
This did not just happen to mutual funds investment. I did that to other kind of investments as well. I felt that I wanted to spend as little time as possible and leave everything to the experts. I was lazy to learn and manage my own investments actively.
Later, I learned from the Rich Dad’s series by Robert Kiyosaki that financial education is essential. Since I always desire to be wealthy, I have decided to gain financial literacy. After studying for a few years, I have learned a lot of things and that really open my open eyes.
As an investor, I am responsible for the outcome of my investments. No one else is responsible for the result of my investments. This is the part where most people missed out. They thought that they could leave things to the expert and do nothing.
Firstly, I have the responsibility of selecting the expert to manage my investments. I need to select expert based on their track records. In the case of mutual funds investment, I need to select the fund manager who has track records to increase my odds of winning.
Secondly, I have the responsibility of monitoring my investments regularly. If things are not in order, I should consider cutting loss and get out of the investments. In the case of mutual funds investment, if I have invested in a particular sector, I need to check that there are no bad news regarding the sector that may affect my investments. If the sector is expected to perform badly for the next few years, then my mutual funds investment will definitely perform badly. Then, I should consider cutting loss.
Thirdly, I have the responsibility of choosing the correct investment company. If an investment company has financial problems, then I face the risk of losing money if the company were to liquidate. In the case of mutual funds investment, if the fund house had financial woes, I would be asking for trouble by investing my money with them.
Next, I have the responsibility of choosing the right investment product. If I choose the wrong investment products, I am almost guaranteed to loss money. In case of mutual funds investment, if I had chosen a dotcom fund just after the dotcom bubble had burst, I would definitely be losing money.
Then, I have the responsibility of getting the cheapest investment cost. If I have choose an investment with high investment cost, then it simply means that my investment return needs to perform better than the high investment cost before I can make money. In the case of mutual funds investment, I should look out for ways to reduce sales charge, expensive ratio, fund management fees and so on.
Lastly, I have the responsibility of planning for my investment. Like what I have learned from the Rich Dad’s series by Robert Kiyosaki, investment is a plan. In the case of mutual funds investment, I should time my entry and my exit properly. The performance of the mutual funds goes up and down over the years. If I had not set any profit target for my mutual funds investment, then I would be holding on to the funds indefinitely. I would end up not selling my mutual funds when there is a reasonable profit. If I needed my money when the market had dropped, then I would be losing money by cashing out at the wrong time.
The above are just some responsibilities as an investor. They are by no means complete. I believe when I learn more, the list of responsibilities will grow. In short, one need to be responsible for one’s investments.
* DISCLAIMER *
The author only provides the material and information as a layperson’s views about an important subject. The materials and information are from sources believed to be reliable and from his own personal experience, but he neither implies nor intends any guarantee of accuracy.
All the materials, information and procedure in this book are only the author’s personal opinion. You must consult your own professional advisor and other reputable sources on any matter that concerns you or others.
The author, publishers and distributors are not competent and do not profess to give legal, accounting, medical or any other type of professional advice. The reader must always seek those services from competent professionals who can review your own particular circumstances.
The author, publisher and distributors particularly disclaim any liability, loss, or risk taken by individuals who directly or indirectly act on the information contained herein. All readers must accept full responsibility for their use of this material.
Max Ng
http://www.articlesbase.com/non-fiction-articles/be-a-responsible-investor-102531.html
