What makes investing so risky?

Investing will always be risky since nothing is guaranteed, but you can choose a combination of assets that makes investing less risky.

Diversification is a technique used to manage risk by adding different types of investments to a portfolio.

Photo by conorwithonen, courtesy of flickr

Diversification is not just creating a portfolio of ten stocks instead of two. To maximize the benefits of diversification, a portfolio should contain a mix of assets (bonds and stocks).

Within each asset class, there should be more than one type of security.

The choices should contain issuers who face different types of risk, or varying degrees of the same risk.

Combining the various securities will never completely eliminate risk, but it can balance the risks.

Here are some different risks that issuers may face: interest rate risk, inflation risk, sovereign risk, exchange rate risk, business risk, financial risk, liquidity risk and political and regulatory risk.

Some companies face all of these risks, while others face just a few. By picking companies with different levels of risk exposure you may be able to achieve average returns while assuming lower than average risk.

Risk comes in many forms, some of which cannot be escaped. Diversify with risk in mind and never put all of your eggs in one basket!

I was speaking to a client a few weeks ago. She has been struggling to find a job for years for many reasons that she is just realizing. One of the things that she has come to realize is that corporate America is not for her. Why do people end up in 9 to 5 jobs? Many times people fall into their jobs out of sheer necessity. They want and need to put food on the table and pay their bills.

There is nothing wrong with working to care for your family, but working a 9 to 5 may not be how you are bent. It may not be the best place for you. For this client, it took a long time for her to come to the conclusion that some of the issues she has faced in organizations had nothing to do with the people or the job. It had to do with her fit. She didn’t fit in the organizations. She took jobs out of necessity not because she had a passion or desire to do what she was doing. What about you? Why are you pursuing the job (s) you are pursuing? Why are you working where you work? Are you struggling in the job or the profession? What is it that you could do differently that would evoke passion from you in your career choice?

Lots of questions, but the answers lie within you as an employee. Maybe you are cut out for a 9 to 5 job. But what if you aren’t? Are you willing to take a risk and do something different? Are you willing to explore some different options and move out into uncharted waters?

I had the opportunity to meet with an young lady recently who is making a career change. From corporate America to entrepreneur. She has known for a few years that she needed to make the change, but held back and dragged her feet. And now, in the midst of a crazy economy she is ready to make the move and go out on her own. WOW! That is huge risk! But I admire her courage and belief in herself. She is going be successful. She has the passion and drive to move her new business forward. How about you? What should you be doing in your career? Is it time for a change or are you wasting away in a 9 to 5? Feel free to scroll down and leave me a comment!

Image Credit: sxc.hu

For most people this picture represents fruit, ready to be picked and consumed. My question is how hungry are you? What are you willing to do to be successful in your life? The first time I heard the phrase “stay hungry”, I was sitting in a leadership training class. Stay hungry represents your appetite for the challenges of leadership. It represents your willingness to risk, to push past your fears and doubts into creativity. Stay hungry represents passion. What are you passionate about? Happy Wordless Wednesday!

Image Credit: by Dana Fuqua, From Mission Trip to Ghana

Now here is an interesting question for you to consider when thinking about an interview. Are you an asset or liability for the organization you are interviewing with?

As a hiring manager when evaluating candidates, determining whether you as a candidate will add value to my organization is a very important question to answer.

Managers must determine the risk vs. return they will get for hiring you and allowing you to work in their organization. As a candidate you must demonstrate your value - you must demonstrate that you will be an asset to the organization.

Questions to consider to determine whether you are an asset or a liability?

1. Do you have the skills and abilities needed for the position?

2. Are you willing to invest your time and energy to see the organization be successful?

3. Check your attitude - Are you difficult to work with?

4. Are you worth the monetary value connected to the position?

5. Are you a leader? Follower? Problem-solver?

6. How do you define success?

7. How long are you planning to work with this organization?

8. Are you teachable?

9. Are you dishonest? Are you lying to get this position? Did you stretch the truth about your skills and abilities?

10. Are you one that brings contention and strife everywhere you go?

These are 10 questions for you to consider as you determine whether you will be an asset or a liability to the hiring organization. All of them are important, but your integrity, your trustworthiness is a key ingredient to determining your value to the organization.