Friday, 14 December 2012
Investors Seek Alternative Investments to Reduce Stock Risks
Nowadays, investors have been lulled into thinking that long-term stock investing, greatly reduces their investment risk. The truth of the matter is that stocks are risky, no matter how long you hold them. Even though findings from a recent research paper by Ned Davis Research Center, reported that equities will perform better than some other traditional investing options, especially when compared to safer investments; like high-interest savings accounts (for example). Most investors believe that is as it should be. Higher returns should modestly compensate investors for taking the added risk. However, this in no way implies that stocks will become less risky, over time.
Despite the assurances of the financial industry, stocks are always a risky investment and the longer investor's hold them, the better chance there is that an economic downturn; will blindside the investment community. Because stocks don't always perform the way investor's would like, and diversification of a stock portfolio cannot eliminate/reduce the investment risk, confused investors are seeking alternatives to improve the over-all performance; of their traditional investment strategies.