Risk and Return are two of the most important words when it comes to investing. Risk is linked very closely to return and so one can’t be looked at without the other.
We've often said that cash probably shouldn’t even be regarded as an asset, due to it being crushed by inflation and low interest rates. However, there is a time when holding cash is the best position to be in...
Hedging is something we have all heard of, even non investors have heard of, “hedging your bets.” Hedging is limiting your downside risk by taking on an opposing trade to your main position.
Every investor knows what risk is but not everyone is sure how to calculate it. It is important for investors to know if their expected returns are worth the risks they are taking.
As the saying goes, “Don’t put all of your eggs in one basket.” Diversification is simple but effective and implemented by most investors.
An inverse rate tracker or inverse ETF makes money as the market falls. In the same way an ETF increases in value as an index or price rises, an inverse ETF makes money when the market falls.
Options are derivatives that act like an insurance policy against future price movements of an asset. An option is essentially a contract to buy a stock or asset at a specified price within a specified timeframe.
Gold and other precious metals are well known hedges in times of crises. Their finite supply means they will always be seen as a store of value. Gold is a tangible asset and the price will not fluctuate to the extent equities will.
CFDs are a leveraged product used to trade long or short predictions on market movement. If used correctly, with a clear strategy, they can be very powerful tools. In hedging they can be used to create a custom short trade against almost anything and if you get it right you could come out of a crash in profit.