• Investment risks can seem scary, but they are a part of making money through investing. Even the famous investor Benjamin Graham said that investing is about managing risk, not running away from it. So, how can you deal with these risks? Let’s break it down in simple terms.
  • What Are Investment Risks? When you invest your money, there’s a chance you might not make as much as you hoped, or you could even lose some of it. This is what we call investment risk. It happens because financial markets can be unpredictable. Prices of Equity mutual funds, stocks, bonds, or other assets can go up and down.
  • Types of Risks: There are different types of risks, but here are a few you should know about:
  • Market Risk: This is when the entire market goes up or down. It’s beyond your control.
  • Credit Risk: If you lend money (by buying bonds or depositing it in a bank), there’s a risk the borrower might not pay it back.
  • Inflation Risk: Over time, money’s value can decrease because of inflation. So, your investment may not grow as much as you think.
  • Liquidity Risk: This happens if you can’t quickly sell an asset without losing its value.
  • How to Manage Investment Risks: You can’t eliminate risks, but you can control and reduce them.
  • Diversify: Don’t put all your eggs in one basket. Spread your money across different types of investments. If one doesn’t do well, the others might.
  • Invest for the Long Term: Markets go up and down in the short term. But over time, they tend to grow. So, think long-term to ride out market fluctuations.
  • Research: Learn about what you’re investing in. The more you know, the better decisions you can make.
  • Risk Tolerance: Everyone’s different when it comes to how much risk they can handle. If you get nervous easily, you might prefer safer investments, even if they offer lower returns. If you can handle more risk, you might go for investments that could bring higher rewards but are riskier.
  • Professional Help: If all of this still seems confusing or too much to handle, you can seek advice from a financial advisor. They can help you make choices that match your financial goals and risk tolerance.
  • In conclusion, investing involves some level of risk. But remember, risk doesn’t mean you’ll always lose money. Over time, if you manage it well, you can make your money grow. So, don’t let fear hold you back from investing. Understand the risks, make informed decisions, and let your money work for you over the long term.

Related posts:

  1. The rule states that an investor should aim for 10% return on investment on equity or mutual funds, 5% on debts, and 3% on savings bank account. Benefits of this rule: -diversify their portfolio -minimize risk -potentially achieve high return over long-term. When it comes to investing strategy, one should analyses the goals, risk tolerance and financial circumstances.
  2. Insurance is not an investment, despite the misconceptions of many people. Simply put, insurance is a risk management strategy. A pure term insurance plan offers the policyholder no benefits whatsoever, both during the life of the policy and after it expires. However, in the event of an untimely death, the candidates receive the death benefit. Insurance is not meant to make you wealthy while you are still living, but rather to protect your loved ones from poverty after your passing. Simply said, investing in financial products is done with the hope of making money after taking into account the investor’s financial objectives, risk tolerance, and expected return. As with various fixed income investments, one can keep onto the investment and take advantage of periodic returns, if applicable.
  3. It’s excellent to have the intention to invest, but if the objective, the duration of the investment, and the financial tool are unclear, it serves no useful purpose. Decide why you are investing, how long you plan to invest, what your risk tolerance is, etc. before you ever begin to invest. You can easily accomplish your investment goals by following these methods.
  4. Some people, i.e. speculators, have the knowledge, time, and resources at their disposal to incur significant risks in exchange for rapid rewards.
  5. The equation says that if you invest Rs. 15,000 per month in an investment instrument that gives 15% returns, you can accumulation Rs 1 Crore in a span of 15 Years. Benefits of this rule: -Spreads investment across multiple asset classes -Good starting point for investors -Maintains desired balance of assets -Suits investor’s changing financial objectives When it comes to mutual fund investments, you should not only invest money but also your time, because here time is also money!
  6. Here’s is an important myth vs fact for you. Investing some proportion of your money is a smart decision that can provide financial stability and peace of mind.
  7. There is never a right or wrong time to begin investing. What important is that you make the appropriate investing decision and make regular investments. To achieve your financial goals, it is crucial to create a solid financial strategy and adhere to it no matter what.
  8. Just like a gardener, let your wealth grow with regular contributions to investment and patience. Cultivate your financial future today.
  9. Investing is important but becoming a knowledgeable investor is powerful. Gaining informative insights is a roadmap to your investment goals.
  10. Risk & Insurance