Risk – What You Need to Know When Investing
The dictionary describes risk as the ‘possibility of injury, hazard or loss.’ To take a risk is to take an action that could result in injury, hazard or loss. When it comes to financial risks, it means that there is the possibility of loss of money.
But with every financial investment you make, you don’t just risk losing money, you also stand to gain some. The way the money game is played, usually, the higher the risks, the higher your chance of earning more. It can be a tricky game of chance and yes, some amount of luck. But when you take time to study the way the markets work, and how an investment is performing, you can help decrease the risks considerably.
When it comes to investments, there are many different risks that could affect whether you gain or lose money. Very briefly, let’s take a look at some of the risks that could cause you to lose money:
Market risks: Market risks affect the whole market. Market rates for investments like shares are always changing; sometimes you gain because the rate goes up or you lose when it goes down. A change in interest rates based on the market can also affect if you earn or lose. And finally, international currency exchanges can also have an effect on your investment depending on whether your own currency is doing well against others or not.
Credit risk: A credit risk is when the person or company you bought a bond from is unable to pay you the interest rate that you expected. As it so happens, you can earn more from a higher credit risk investment if the bond does well.
Liquidity risk: Liquidity risk means that you can’t liquidate your assets. In other words, you can’t sell your investments for cash that can be used in the real world.
Inflationary risk: Unfortunately, the value of money erodes over time. Investing a $1,000 now with the hope of earning $5,000 in a few years might sound like you have earned money, but the value of the dollar would have dropped, so, $5,000 is worth much less when you earned it than when you invested the money. If you don’t account for inflationary risks, you will lose a lot of money.
Concentration risk: Very simply put, this is putting all your eggs in one basket. If you invest in just one company, and if that one fails, you risk losing everything. The key is to diversify and find a few different baskets for the eggs.
CryptoStops and Crypto Investments
We know that cryptocurrencies are making an undeniable dent in the markets. More and more people are starting to buy coins based on the success of Bitcoin. However, the same investment risks apply to cryptocurrency investments as well. At CryptoStops, we have a suite of tools that can help mitigate your risks.
Our set of stop-loss tools will help you to maximize your token trades, eliminate emotion, and implement a strategic plan to help your crypto investments grow. Get a notified of our launch and a free trial subscription here: http://eepurl.com/dDT97z
#risk #investing #investmentrisk #whatisrisk #cryptoinvestments