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One of the important things you need to be aware of when it comes to investing is your risk tolerance. You should know how much risk you can take — and this includes your emotional tolerance for risk as well as the tolerance your investment portfolio has.

Risk tolerance: Financial risks

It is often easier to figure out your financial risk tolerance. Before you add an investment to your portfolio, you run the numbers. Financial risk tolerance is how much you can afford to lose, and still be in good shape financially. For those who can afford to lose a great deal of money (or for those who are younger and have more time to make up for losses), the financial risk tolerance is higher. The key is to avoid taking on risks that will leave your finances in ruins.

Risk tolerance: Emotional risks

While it would be nice to say that investing is something that is objective and purely numbers-based, you know this isn’t the case. Emotions play a part in your ability to invest. Some people, even those with a high financial risk tolerance, are worriers. Emotionally, they are concerned about losing money and worry that they picked the wrong investments. If the emotional stress is too great for you, then you need to adjust your investment strategy accordingly.

Progressive investing strategy

In order to handle both the financial and emotional risk tolerance you have, you can engage in progressive investing. In this strategy, you start out with very conservative investments that have lower risk. You get used to managing those investments and learn how investing works. As you gain more experience and knowledge, you can start to slowly add riskier investments.

There is no one right way for everyone to invest. You need to evaluate your own investing strategy and style, and work with what is comfortable for you.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Tags: risk tolerance, investment portfolio, investing blog, Fed rate decision,
investing strategy, investments, progressive investing

The stock market is mixed this morning, as new data comes in. Worries over the financial sector (thanks to news of bank failures and crackdowns) are renewing themselves again. Additionally, oil prices are rebounding after declining overall for a few days. Increased oil prices usually weigh on the stock market. Investor’s Business Daily reports on some of the movers today on the stock market so far:

GMX Resources (GMXR) gained 2.85 to 71.34 in fast trade. The oil and gas producer is working on the right side of a new base.

Group mate EOG Resources (EOG) climbed 5.30 to 105.71 on brisk volume. It’s trying to recover from a 37% sell-off, but the stock has met resistance.

On the downside, Big Lots (BIG) fell 1.68, or 5%, to 31.38 in heavy trading, despite beating views and raising guidance.

LDK Solar (LDK) slipped 0.81 to 49.25 as it pulled back from a seven-month high. The Chinese solar wafer maker rose 9% Monday on a strong sales outlook.

With economic data mixed, investors are wary of where to go next.

One of the best things to do in times like these is to carefully evaluate some value stocks that are likely to pull through the current bear market. This are stocks of companies with strong fundamentals. Strong fundamentals mean that the underlying strength of the company’s management and business model will pull the stock through these tough times.

The reason now is the time to buy such stocks is that you can get them for a lower prices. At some point, the stock market will rebound (it always does; over time the stock market gains overall) and when it does, the solid stocks that you buy now will provide you with some tidy gains. The trick, of course, is choosing the stocks that will make it through this particular difficulty.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Tags: stock market, stock market news, investing blog, value stocks,
bear market, investments, oil prices

Investment services seem to abound. There are a variety of brokers, from the guy at the bank who can arrange securities transactions, to Wall Street brokers to online discount brokers. All of these professionals offer a variety investment services that can help you make money.

But beware: Some of these investment services cost enough that they eat away at your earnings. It is important to consider the investment services offered, and whether it is worth paying for these services.

Three major investment services

According to Thomas Smith, CFP, CFA and his article on Investopedia, there are three major value components when it comes to investment services:

• Administration: This is probably the component that you will most likely need the most help with. Since you are unlikely to always have direct access to markets, it can be difficult to take care of the administrative aspects of investing. This also includes such items as compiling tax information (you can do it yourself, but it can take for-ev-er). Plus, professional administration can help you stay on top of regulations. Compare administration fees and commissions. You would be surprised at how these vary from brokerage to brokerage.
• Portfolio management. Acquiring investments is different from managing them. Administration services generally do not include investment portfolio management. This is something you can do yourself. It does take time and effort to build a good portfolio that is balanced and allocated for your needs, but it is possible that you can do it fairly well. Smith points out that many “professionals” are not terribly versed in portfolio management.
• Advice. Many people pay for investment advice. However, this is probably — in Smith’s view — the easiest area for you to get good value by taking care of it yourself. From investing books to information and news online, there are many resources available that can help you make good investment decisions. Just be wary of where you get your information.

With some careful planning and by choosing which investment services you pay for and deciding to do some of it yourself, you can build a good investment portfolio that isn’t devoured by fees and commissions.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Tags: investment portfolio, investment services, investing blog, portfolio management,
investment advice, investments