Investment Risk Pyramid

All investments involve some degree of risk. In finance, risk refers to the degree of uncertainty and/or potential financial loss inherent in an investment decision.  In general, as investment risks rise, investors seek higher returns to compensate themselves for taking such risks.

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There are different types of risks to evaluate which include: business, volatility, inflation, interest and liquidity risk. The goal for each investor will differ depending on their investing techniques but the ideal scenario is to have enough exposure to risk to get a decent reward without compromising your entire portfolio. …
Overall, it is possible and prudent to manage investing risk by understanding the basics of risk and how it is measured.

The greater the amount of risk an investor is willing to take, the greater the potential return but make sure never to risk more than you can afford.

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