Investing With Stratford Management Japan
Investments can be summarized using two words: reward and risk.
It’s a reality that investments will carry a certain degree of risk with it.
Knowing the type of risk or the mixture of the kinds of risk is essential in mitigating certain risks.
For investors, especially those who are just starting, the investment world may be overwhelming and disheartening.
Thus, as investors, we must take the necessary steps in building the proper roadmap for your investment portfolio.
Having the right strategies to reduce exposure to risks can help investors enjoy the fruits of their investment.
Before knowing the steps, one must take, it is essential to know the different types of risks and how high or low your tolerance is. It can start by understanding your risk capital and net worth.
Liabilities deducted from your assets is your net worth, while the money you are willing to lose while investing and will not have significant repercussions to how you live is your risk capital.
With Stratford Management’s expertise, we will help you build a strong investment portfolio according to your risk tolerance.
We will be there every step of the way, from reviewing the history of the investment, earnings performance, and risks involved in comparing your investment fund’s returns to other related investment items on your portfolio.
Before we dive into the right strategies we can apply to your portfolio, and you must know the different risks that come with our investments.
Overview of Investment Risks
The word “risk” is always taken in a negative context.
But in the world of investment, the risk is inevitable and inseparable from the rewards you want to achieve.
Investment Risk is defined as a deviation from predicted results wherein the deviation can be absolute or related to another thing like a market benchmark.
A deviation can affect the investment either positively or negatively; either way, experts use the study of risks as leverage to make better strategies.
Thus, one expects to consider more risks to earn better returns.
Here are the types of investment risks.
The chance of loss because your capital is all put in one investment or investment form.
You spread the risk over various kinds of investments, industries, and places when diversifying your investments.
This risk is present in investments in stock shares.
Based on demand and supply, the stock price of securities changes all the time.
Equity exposure is the risk of failure due to a decrease in shares’ valuation on the exchange.
Risk of Interest Rate
Risks that may deviate bonds or other debt investments.
This risk is present for getting a loan to start your investment.
The risk of losing cash is due to a change in the interest rate. For starters, the stock value of bonds will decrease if the interest rate goes up.
This risk pertains to the risk of financial problems being faced by the government institution or corporation issuing the bond and not paying the interest or redeem the principal at maturity. For debt assets such as bonds, collateral risk applies.
By looking at the bond’s credit value, you will determine credit risk.
Currency risk refers to foreign investments you have made.
This risk is the possibility of losing money due to a change in the exchange rate.
Your U.S. currency would be worth less than Canadian dollars, for instance, as the U.S. currency becomes less expensive compared to the Canadian dollar.
Risk of Liquidity
The risk comes in when you cannot trade off your investment at a reasonable price and not be able to get your money out when you like to.
You will have to consider a discounted price to sell the investment.
In certain situations, like exempt market transactions, selling the investment will not be feasible at all.
The possibility of cutting your investment period due to unexpected events, like being fired from your work.
This event will cause you to sell long-term assets that you were hoping to retain.
You may lose money if you must sell at a time when the markets are down.
Risk of Inflation
Inflation is one risk we cannot control.
The risk of a decline in your buying power because inflation negatively affects the value of your investments.
Over time inflation weakens money’s buying power-the same quantity of money can acquire fewer goods and services.
Real estate also provides some protection since rents can be raised over time.
If you possess debt or cash assets such as bonds, inflation risk is especially significant.
Shares provide some insurance from inflation, and the rates they charge most firms will increase their customers.
Therefore, share prices need to increase in line with inflation.
Risk Management Strategies
Given the risks involved, rewards are then protected or increased using the right risk management strategies.
Here are the methods Stratford Management can apply to your investment portfolio.
To do diversification, you create a portfolio of investments within different sectors and industries not related to one another.
You can also purchase index funds so the mutual fund itself would hold hundreds of stocks.
This way, if adverse events happen, not all your investments will be hit hard.
This approach is one of the most widely accepted strategies even suggested by many financial analysts and influential personal finance magazines and books.
It is crucial to diversify portfolios, and you must consider their limits.
Scams are everywhere; thus, it is also essential to add fraud risk management in diversifying your portfolio and help you identify which investments are scam and which are good for your portfolio.
A proactive investing technique that will help even out the impact of price volatility in your portfolio is dollar-cost averaging.
You add a fixed dollar sum to the acquisition daily of stocks, shares, and mutual funds for this strategy.
Consequently, when prices are low, you buy more shares, and when prices are high, fewer shares.
Usually, the net cost of the stock would be smaller than the average price of such stock over time.
And since this technique is systemic, it will help you discourage emotional, financial decisions from being made.
Allocating your assets
The right way of allocating your assets translates to the method you weigh your fund assets to accomplish a specific target, which can be the most decisive factor in your investment portfolio’s performance.
For example, you may plan to put as much as 70% of your investments in stocks and as little as 30% in bonds if you aim to seek growth, and you’re willing to take on market risk to achieve that goal.
Be sure you know the investment timeline and the potential costs and benefits of each asset class before considering how you can split the asset classes in the portfolio.
Importance of Risk Management
Without risk, there is no reward, and whether you are reluctant to take such risks, investing may not work for you.
If risk is something that you can embrace, given the right strategies, you can also enjoy your way to financial freedom.
Risk management is the key to minimizing risks.
Risk management involves careful risk and returns balancing.
Evaluating this balance, depending on individual preferences, should be the primary consideration when building an investment portfolio.
Stratford Management is committed to handling your assets in a way that prioritizes the protection of the capital that you spend on your investments.
We give our clients a comprehensive risk assessment and personal and financial risk management solutions.
Another kind of risk to which people are vulnerable is scam or fraud.
It is far preferable to prevent scam than to detect it after the fact.
As part of the overall risk control initiatives, we have the expertise in implementing fraud prevention and identification framework to your investments.
You, our clients, are at the center of everything we do. We serve what’s best for your interest.
That is why we aim to have outstanding returns of investment, excellent support, and numerous risk management frameworks.
The team we have at Stratford Management encourages a long-term outlook that matches our values with those of our customers.
Our goal is to provide our clients with a comprehensive understanding of everyone’s needs in the quest for investment success.
A thorough holistic risk evaluation could help guarantee that the subsequent, interlinked phases of wealth management and personal risk analysis are just the initial steps we take to start managing your assets.
Continuous customer engagement to track portfolio outcomes, possible risks, and rewards is also done to match your needs and demands.
This way, you are assured that all your investments are safe even when adverse events occur.
Start your way to financial freedom with the help of our expert team here at Stratford Management.