Wealth is an abstract. It is sometimes defined as fecundity or sustainable spending. It is defined as the primary goal for investors and is measured by the level of expendable income or capital in their portfolio.
Many people define wealth by the total of their assets including real estate, funds, and investments. Others measure it by calculating the amount of money they can afford to spend. Either way, it is important to pick one method of calculating wealth, and stick to it.
How wealth is defined dictates how a person approaches investing. Benjamin Graham states that the investment management is the management of risks, not of returns. This is the foundation of a well-managed precept.
There are several methods of managing risks. Each one provides several benefits, depending on the investors aggressive behaviors or willingness to accept high-risk ventures. However, understanding risk can be tricky. One person, such as a broker, may consider a stock that does not perform well as a high-risk stock. A private investor may consider a low-risk stock anything that does not drop below the 10% level.
Individual Risk
This is the risk associated with...
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