Over long periods stocks have outperformed other asset classes. However, that out performance has come at a price of greater volatility.
Consider that when in the phase of accululating assets volatility is not crucial and actually may be helpful in accumulating a portfolio. In the consumption phase (i.e. retirement) what is also very important is the stability of an income stream to live on. So most advisors recommend reduction in stock exposure in retirement.
Each individual has there own risk tolerance, which must be considered in putting together a portfolio. These may include low-risk, medium risk and high risk persons.
Buying stocks on margin (keeping a mortgage on your residence) is a higher risk strategy. This higher risk strategy may yield higher returns. However, this is an inherently riskier strategy and should be understood as such. Low or medium risk persons may not want the added risk. Higher risk individuals may like the chance at higher return for the added risk.
for more info see link, click on MPT:
http://www.moneychimp.com/
Consider that when in the phase of accululating assets volatility is not crucial and actually may be helpful in accumulating a portfolio. In the consumption phase (i.e. retirement) what is also very important is the stability of an income stream to live on. So most advisors recommend reduction in stock exposure in retirement.
Each individual has there own risk tolerance, which must be considered in putting together a portfolio. These may include low-risk, medium risk and high risk persons.
Buying stocks on margin (keeping a mortgage on your residence) is a higher risk strategy. This higher risk strategy may yield higher returns. However, this is an inherently riskier strategy and should be understood as such. Low or medium risk persons may not want the added risk. Higher risk individuals may like the chance at higher return for the added risk.
for more info see link, click on MPT:
http://www.moneychimp.com/
