Risk goes beyond statistical numbers such as what is called standard deviation. That is a $1000 term used by financial analysts looking at investment portfolios. It’s a term that really need not concern individual, everyday, non-professional investors. (The return you get from gains and losses you may expect about two thirds of the time over a year.)
Investors for example, should subject themselves to consideration of manager risk by choosing an investment portfolio that's fully actively managed. What happens if your investment manager leaves or fails to do as well as in the past? That is manager risk that can't be measured by numbers or statistics alone.
A well designed portfolio will consider your acceptable risk. or 'risk tolerance.' Your investment time objective age, psychology and investment goals are other factors. More importantly, who will be managing your portfolio?
I personally recommend mutual funds or exchange traded funds (ETFs). Better still, I always suggest non-managed funds, those indexed to foreign and domestic standards you want to emulate, such as the S&P 500, as one example.
Paying 2% to 3% of your assets as a minimum charge to investment advisers can represent as much as 20% or more of you annual investment income. And you will be receiving little practical advice in return.
I repeat what I often say: I do not recommend investment advisers unless you are extremely wealthy. In that case, you certainly need a tax accountant, lawyer, and/or an estate specialist.
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