By Stephen Kates, CFP, Bankrate.com

No risk, no return!

How many times have you heard that phrase or something similar?

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It’s usually meant to encourage. A rallying cry for entrepreneurship, industry and capitalism, it also alludes to the inverse — that high risk translates into high return. But when it comes to investing, it isn’t quite so simple.

Risk vs. return in investing

While risk and potential return can be intimately related, it’s not a one-to-one relationship, which is why managing risk in an investment portfolio is one of — if not the most — critical aspects of investing.

It is entirely possible to take huge risks and have no reasonable expectation of an outsize return. This might be most closely associated with gambling. If all you’re doing is betting big and hoping for a payoff, the value of your risk is entirely dependent on the outcome. A positive result affirms the risk was worth it, even if the logic of the bet wasn’t sound, and vice versa.

Certain types of systemic risk are, by their nature, hard to anticipate and harder to avoid. The COVID-19 pandemic was one such example. If we could foresee these risks, plan for them and hedge them, they wouldn’t really be risks at all. In investing, we plan for and manage those risks through diversification and asset allocation.

The 3 types of risk

Prudent portfolio management should take into account a careful consideration of three key measures of risk.

Risk tolerance is your willingness to accept risk of loss and can be felt as an emotional measure of the amount of pain or stress you can withstand as an investor.

Risk exposure is the amount of risk your portfolio is actually exposed to based on the investments you hold.

Risk capacity is your financial ability to withstand both acute and long-lasting losses within your portfolio. Put another way, this is a measurement of your financial fragility.

Risk tolerance

It is hard to test one’s risk tolerance outside of a real-world situation that impacts your finances. Backtests and mock trading strategies can’t duplicate the real experience of gaining or losing money in the market. Inexperienced investors often overestimate their risk tolerance, resulting in panic if it all goes wrong. It can be better to learn those lessons early, when you have only a little money at stake, instead of later in life when you’re more likely to be managing larger sums.

Another complicating factor with measuring risk tolerance is the fact that one’s risk tolerance can evolve over time. This is normal but it does mean that your portfolio needs to adapt to your relative comfort with risk. Some investors may become more comfortable with risk as they become better investors, while others may become more conservative as they approach retirement or feel the weight of potential losses.

Similar to Ernest Hemingway’s famous quote about bankruptcy, anxiety over your risk of losses can happen slowly, and then all at once. Market volatility can arise swiftly and catch investors off guard. As seen in the graph above, investors enjoyed a relatively tame period between 2012 and 2020. In 2020, as the pandemic hit, volatility exploded, taking many investors by surprise.

If you only pay attention to your portfolio risk after witnessing substantial losses, it is too late to make the right changes. These kinds of surprises may leave you anxious and prone to emotional decision-making. Being forced to make financial decisions under duress is a recipe for regret.

Risk capacity

Awareness of your relative financial stability is key to judging your real risk capacity. Conducting a risk assessment and creating a financial plan is one of the most thorough ways to assess your financial weak points. Analyzing your cash flow, emergency fund, goal progression and income needs can shed light on how much wiggle room you might have if your finances or portfolio deteriorate by a certain amount.

For instance, if paying for your essential expenses, such as your groceries and mortgage, requires both spouses’ incomes, then you are more susceptible to financial hardship if one person loses their job than someone who can cover those expenses on a single income. Neither income arrangement is right or wrong; it simply informs how you should manage your risk exposure and cash safety net.

Risk exposure

Exposure cuts both ways. Ratcheting up the risk exposure through higher allocations to stocks, cryptocurrency or options can increase a portfolio’s potential returns — but also its potential losses. Over a given period of time, riskier investments don’t always translate risk into opportunity or behave in easy-to-understand ways.

An investor with multiple sources of income, a robust emergency fund and dry powder on the sidelines can withstand risk exposure better than an investor who lives paycheck to paycheck and has no safety net due to market or income losses.

Measuring risk should be done using various methods, including average rate of return, beta, Sharpe ratio, standard deviation and maximum drawdown expectations. A basic understanding of these measures is useful for the average investor, but vital for self-directed investors who are pushing the envelope with risk.

Statistical measures of risk

—Beta (β)

This evaluates the volatility of a single security or fund when compared to the market as a whole or its respective benchmark. A stock with a beta of 1 has the same volatility as the benchmark, while a beta of 2 is twice as volatile as the benchmark.

—Sharpe ratio

This formula is used to compare the historical return of an investment with its past volatility to determine whether excess returns are a result of risk or investment skill.

—Standard deviation

This measures the variation around the stock’s average return. A high standard deviation means an investment has high variability and may experience a wide range of possible returns over a given period of time.

—Maximum drawdown

This is the largest drop in value an investment may experience from its highest to lowest point over a given period of time, based on historical records. As the saying goes, past performance is no indication of future results, and no single investment can be predicted. A word of caution: Drawdown measurements are backward looking and do not predict how much an asset can fall in the future. The more diversified the asset, the more consistent this measurement may be. For instance, the historical performance of a single stock offers less useful information than the historical performance of an entire index.

Aligning the 3 measures of risk in your portfolio

However you decide to measure and manage risk, it is critical that you align your risk exposure to your tolerance and capacity for risk. It can be tempting and easy to let your risk exposure drift higher as the market rallies over multiple years, but when corrections or bear markets do come, you don’t want to be left watching your gains evaporate.

Ideally, all of these measures will align. However, this is usually rare.

There are many reasons that your risk tolerance might be more or less than your financial capacity for risk. Aligning your risk exposure properly should be a compromise between your risk tolerance and your risk capacity. The portfolio that suits you best should be dictated by the lesser of these two measures.

A key marker of a well-designed strategy should be the ability to remain invested through various market environments. A comprehensive financial plan will account for good and bad years. It is possible to be an above-average investor by simply achieving average returns for an above-average length of time.

While historical charts of indices such as the S&P 500 reveal down years, the majority of years not only have a positive return and some show double-digit percentage growth. Participating is the critical part, because if you can weather the bad years, you can enjoy the good ones.

©2025 Bankrate.com. Distributed by Tribune Content Agency, LLC.

By WYATTE GRANTHAM-PHILIPS, Associated Press Business Writer

NEW YORK (AP) — It’s a tough time to be looking for a job.

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Amid wider economic uncertainty, some analysts have said that businesses are at a “no-hire, no fire” standstill. That’s caused many to limit new work to only a few specific roles, if not pause openings entirely. At the same time, sizable layoffs have continued to pile up — raising worker anxieties across sectors.

Some companies have pointed to rising operational costs spanning from U.S. President Donald Trump’s barrage of new tariffs and shifts in consumer spending. Others cite corporate restructuring more broadly — or are redirecting money to artificial intelligence.

Federal employees have encountered additional doses of uncertainty, impacting worker sentiment around the job market overall. Shortly after Trump returned to office at the start of the year, federal jobs were cut by the thousands. And the record 43-day government shutdown also left many without paychecks.

The impasse put key economic data on hold, too. In a delayed report released last week, the Labor Department said U.S. employers added a surprising 119,000 jobs in September. But unemployment rose to 4.4% — and other troubling details emerged, including revisions showing the economy actually lost 4,000 jobs in August. The shutdown also resulted in holes for more recent hiring numbers. The government says it won’t release a full jobs report for October.

Here are some of the largest job cuts announced recently:

HP

In November, HP said this week it expected to lay off between 4,000 and 6,000 employees. The cuts are part of a wider initiative from the computer maker to streamline operations, which includes adopting AI to increase productivity. The company aims to complete these actions by the end of the 2028 fiscal year.

Verizon

Also in November, Verizon began laying off more than 13,000 employees. In a staff memo announcing the cuts, CEO Dan Schulman said that the telecommunications giant needed to simplify operations and “reorient” the entire company.

General Motors

General Motors will lay off about 1,700 workers across manufacturing sites in Michigan and Ohio in late October, as the auto giant adjusts to slowing demand for electric vehicles. Hundreds of additional employees are reportedly slated for “temporary layoffs” at the start of next year.

Paramount

In long-awaited cuts just months after completing its $8 billion merger with Skydance, Paramount plans to lay off about 2,000 employees — about 10% of its workforce. Paramount initiated roughly 1,000 of those layoffs in late October, according to a source familiar with the matter.

In November, Paramount also announced plans to eliminate 1,600 positions as part of divestitures of Televisión Federal in Argentina and Chilevision in Chile. And the company said another 600 employees had chosen voluntary severance packages as part of a coming push to return to the office full-time.

Amazon

Amazon said in October that it will cut about 14,000 corporate jobs, close to 4% of its workforce, as the online retail giant ramps up spending on AI while trimming costs elsewhere. A letter to employees said most workers would be given 90 days to look for a new position internally.

UPS

United Parcel Service has disclosed about 48,000 job cuts this year as part of turnaround efforts, which arrive amid wider shifts in the company’s shipping outputs. UPS also closed daily operations at 93 leased and owned buildings during the first nine months of this year.

Target

Target in October said it would eliminate about 1,800 corporate positions, or about 8% of its corporate workforce globally. The retailer said the cuts were part of wider streamlining efforts.

Nestlé

In mid-October, Nestlé said it would be cutting 16,000 jobs globally — as part of wider cost cutting aimed at reviving its financial performance amid headwinds like rising commodity costs and U.S. imposed tariffs. The Swiss food giant said the layoffs would take place over the next two years.

Lufthansa Group

In September, Lufthansa Group said it would shed 4,000 jobs by 2030 — pointing to the adoption of artificial intelligence, digitalization and consolidating work among member airlines.

Novo Nordisk

Also in September, Danish pharmaceutical company Novo Nordisk said it would cut 9,000 jobs, about 11% of its workforce. The company — which makes drugs like Ozempic and Wegovy — said the layoffs were part of wider restructuring, as it works to sell more obesity and diabetes medications amid rising competition.

ConocoPhillips

Oil giant ConocoPhillips announced plans in September to lay off up to a quarter of its workforce, as part of broader efforts from the company to cut costs. Between 2,600 and 3,250 workers were expected to be impacted, with most layoffs set to take place before the end of 2025.

Intel

Intel has moved to shed thousands of jobs — with the struggling chipmaker working to revive its business. In July, CEO Lip-Bu Tan said Intel expected to end the year with 75,000 “core” workers, excluding subsidiaries, through layoffs and attrition. That’s down from 99,500 core employees reported the end of last year. The company previously announced a 15% workforce reduction.

Microsoft

In May, Microsoft began laying off about 6,000 workers across its workforce. And just months later, the tech giant said it would be cutting 9,000 positions — marking its biggest round of layoffs seen in more than two years. The company has cited “organizational changes,” but the labor reductions also arrive as the company spends heavily on AI.

Procter & Gamble

In June, Procter & Gamble said it would cut up to 7,000 jobs over the next two years, 6% of the company’s global workforce. The maker of Tide detergent and Pampers diapers said the cuts were part of a wider restructuring — also arriving amid tariff pressures.

By ILLIA NOVIKOV and SAM MCNEIL, Associated Press

KYIV, Ukraine (AP) — A senior Kremlin official confirmed Wednesday that U.S. special envoy Steve Witkoff is set to visit Moscow next week as efforts to find a consensus on ending the nearly four-year war between Russia and Ukraine pick up speed.

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But Yuri Ushakov, Russian President Vladimir Putin’s foreign affairs adviser, insisted that Kremlin officials still haven’t seen a U.S. peace proposal, even though representatives of the United States, Russia and Ukraine held talks earlier this week in Abu Dhabi, United Arab Emirates.

“Contact is ongoing, including via telephone, but no one has yet sat down at a roundtable and discussed this point by point. That hasn’t happened,” Ushakov told Russian state media.

Ukrainian officials didn’t confirm whether U.S. Army Secretary Dan Driscoll, who in recent weeks has played a high-profile role in the peace efforts, would be in Kyiv in the coming days, as U.S. President Donald Trump indicated Tuesday.

Russia cautious on peace prospects

Trump’s plan for ending the war became public last week, setting off a spate of diplomatic maneuvering. The initial version appeared heavily slanted toward Russian demands for halting Moscow’s invasion of its neighbor.

After weekend talks in Geneva between U.S. and Ukrainian officials, President Volodymyr Zelenskyy said the plan could be “workable,” although key points remain unresolved. A Ukrainian official said that Zelenskyy hoped to meet with Trump in the coming days.

Witkoff’s role in the peace efforts came under a renewed spotlight Tuesday when a report indicated that he coached Ushakov, the Putin aide, on how Russia’s leader should pitch Trump on the Ukraine peace plan.

White House special envoy Steve Witkoff waits for the arrival of President Donald Trump at Teterboro Airport in Teterboro, N.J., en route to attend the Club World Cup final soccer match, Sunday, July 13, 2025. (AP Photo/Jacquelyn Martin)

Trump described Witkoff’s reported approach to the Russians in the call as “standard” negotiating procedure.

“He’s got to sell this to Ukraine. He’s got to sell Ukraine to Russia,” Trump told reporters aboard Air Force One as he flew to his home in Florida on Tuesday night. “That’s what a dealmaker does.”

Kremlin spokesperson Dmitry Peskov said that he “wouldn’t exaggerate (the) significance” of the leaked call, Russian state news outlet Tass reported.

However, “it’s clear that there will be a very large number of people in various countries, including the United States, who will try to disrupt these efforts toward peace,” Peskov said from Kyrgyzstan, where Putin traveled this week.

Asked whether a peace agreement had never been closer, Peskov told reporters, “It’s a little too early to say that,” according to Tass.

Russian drones hit Ukraine university dorm

Russia’s grim war of attrition in Ukraine continued as a backdrop to the diplomatic jockeying, with civilian areas once again struck.

The southern Ukrainian city of Zaporizhzhia came under a large Russian drone attack overnight, damaging more than 50 residential buildings, including a university dormitory filled with people, the head of the regional military administration, Ivan Fedorov, said Wednesday. The attack wounded at least 19 people, he said.

A man walks in front of burning residential building after a Russian attack on Zaporizhzhia, Ukraine, Wednesday, Nov. 26, 2025. (AP Photo/Kateryna Klochko)

Russian air defenses, meanwhile, downed 33 Ukrainian drones overnight over various Russian regions and the Black Sea, according to the Russian Defense Ministry.

Europe wants to be heard

European countries, which are alarmed by Russia’s aggression and see their own future at stake in negotiations over Ukraine, are fighting to make their voices heard in the talks as Washington takes the lead.

German Chancellor Friedrich Merz said Wednesday that Europe wants the war to end as quickly as possible.

“But an agreement negotiated by great powers without the approval of the Ukrainians and without the approval of the Europeans won’t be a basis for a real, sustainable peace in Ukraine,” Merz told lawmakers in Berlin. “Europe is not a plaything, but a sovereign actor for its own interests and values.”

The head of the European Union’s executive, European Commission President Ursula Von der Leyen, was upbeat about recent developments, saying there is “an opportunity here to make real progress” toward peace.

She insisted that any settlement must include future security guarantees for Ukraine. At the same time, she said that a deal can’t contain limitations on Ukraine’s armed forces or block its path to NATO membership. Those limits were part of the initial proposal.

“As a sovereign nation, there can be no limitations on Ukraine’s armed forces that would leave the country vulnerable to future attacks,” she said during a speech at the European Parliament in Strasbourg, France. “This is as much about deterrence as it is about Europe’s security, because Ukraine’s security is Europe’s security.”

Sam McNeil reported from Brussels. Katie Marie Davies in Manchester, England, and Geir Moulson in Berlin, contributed to this report.

By CHRISTOPHER RUGABER, Associated Press Economics Writer

WASHINGTON (AP) — The number of Americans applying for unemployment benefits declined last week in a sign that layoffs remain low, even as several high-profile companies have announced job cuts.

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U.S. applications for unemployment benefits in the week ending Nov. 22 dropped 6,000 from the previous week to 216,000, the Labor Department reported Wednesday.

The number of people seeking unemployment benefits is seen as a proxy for layoffs and is close to a real-time indicator of the health of the job market. The job cuts announced recently by large companies such as Target and Amazon typically take weeks or months to fully implement and may not yet be reflected in the claims data.

The four-week average of claims, which softens some of the week-to-week volatility, dropped 1,000 to 223,750.

The total number of Americans filing for jobless benefits for the week ending Nov. 15 rose 7,000 to 1.96 million.