Making Over Sharon
— -- Congratulations, Sharon, you seem to be doing what is necessary to save for retirement and educate your children. It's not often that we come across folks who want to do more beyond the retirement and education goals.
After doing an excellent job of saving for retirement and funding the children's college education through monthly cash flow, Sharon is ready to take her investments to a new level. However, she does not know whether to invest in individual stocks or mutual funds.
To solve her dilemma, it's useful to start with an understanding of risk, specifically the risks associated with investing.
Risky Business
Total investment risk can be divided into two parts — systematic risk and unsystematic risk. Let's look at each in turn:
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