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Tip of the Day Build a Nest Egg that is 25 Times the Annual Investment Income You Need

Build a Nest Egg that is 25 Times the Annual Investment Income You Need - When it comes time to retire are you going to have enough money to live...

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Systematic Risk

Systematic risk - A systematic risk is also called a market risk or an un-diversifiable risk. This risk applies to a whole class of assets or liabilities and entire portfolios because of the global effect it has on the entire market. Even if they include diversified risks (the mixture of different kinds of securities) they may not be protected. However if the market decline is not global and some areas are still open then having diversified risks can cushion the blow. The practice of hedging (reducing the impact of negative events) can mitigate the negative affects upon a systematic risk portfolio. Hedge funds can be set up to protect against large losses. However, hedge funds are not available to every investor and therefore these investors may rely on short selling and other means of trying to protect their interests.

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airplane said:

Mostly, not only local markets are affected by systematic risks as they occur globally due to some very sensitive issue. And these kind of issues should be resolved immediately.

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According to market running this systematic risk is calculated if the market is affected globally than the risk is going be more it depends upon how the market is traded globally. Investor must have good idea about the risk he is taking when investing into market and see that what type risk he is going to face when markets go down and how much he is going to lose his investment.

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Definition of the Day Exchange Privilege

Exchange Privilege - An exchange privilege is a special feature, which are offered in some of the mutual funds families which allow investors to switch, or swap, from one mutual fund with a family unit to another within the same family fund unit, without paying any additional sales charges. The...

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