This part presents a practical, low-stress approach to investing that accounts for your personality, risk tolerance, financial goals, and time frame. It reveals several standard approaches to investing that you may want to consider | Part II Selecting an Investment Approach and Picking Stocks In this part. very investor has a unique stock-picking system. Many adopt a value approach looking for what they believe to be undervalued stocks. Others prefer a crystal ball approach attempting to predict a stock s performance based on market trends and investor sentiment. Some usually the ones popping the most antacids follow their guts. This part presents a practical low-stress approach to investing that accounts for your personality risk tolerance financial goals and time frame. It reveals several standard approaches to investing that you may want to consider shows you how to find potentially good dividend stocks to invest in and guides you in carefully scrutinizing candidates to pick the best of the bunch. Chapter 4 Risky Business Assessing Risk and Your Risk Tolerance In This Chapter Recognizing the tradeoffs between risk and reward Estimating and beefing up your risk tolerance Addressing factors that often increase risk Acquiring a few techniques for minimizing risk ife is a risk. In fact most things people find worthwhile are risky driving flying swimming getting married raising kids starting a business buying a house but people often engage in these activities because the reward or at least the promise of reward is worth the risk. Each individual has a different risk tolerance a threshold beyond which she won t willingly venture. Some people draw the line at public speaking. For others it s bungee jumping whitewater rafting or sealing themselves in a barrel to take a thrill ride down Niagara Falls. Investing is risky too but you get to choose the level of risk and can take steps to reduce your exposure to it. In this chapter you discover how to measure risk and reward gain a deeper understanding of the tradeoffs gauge your level of risk tolerance recognize the factors that can increase risk and pick up a few techniques for improving your odds. When reward is at its pinnacle risk is near at hand .
