When it comes to investments a lot of people want to invest, but they do not want to encounter any from of risk. The relationship between risk and investment is always present in every investment and cannot be separated from the other. Though there are times where we might choose to invest in low risk investments such as investing in water or gas, the truth still remains that there are some level of risk involved. The higher the risk, the higher returns.
Relationship between risk and investment
- Thread starter eldavis
- Start date
The relationship between risk and investment is inherent. Generally, higher potential returns come with higher risk. Investors must carefully assess and manage risk to make informed decisions aligned with their financial goals.
Higher the risk, higher the returns. For instance, you can get better returns from crypto compared to stocks, however, crypto comes with greater risk compared to the stock market. However, there are ways to manage your risks.
Whenever you'll invest, risk will be there. It's recent practical example is in cryptocurrency market, I took profit so many time from BSV but finally after gaining confidence in it when I invest more amount in it, suddenly it started moving down now I am at loss, I need to wait or take out my investment in loss
Usually the return on the investment is directly proportional to the risk involved. High risk investments usually have high returns, though the returns can change. Earlier domain investing was lucrative, now the returns are very low.
The relationship between risk and return on investment will be directly proportional, the lower the risk, the lower the return and vice versa, choosing an investment instrument must also be adjusted to your financial goals and investment profile.
I won't say that there is a defined relationship between risks and investment. It is more random than it is fixed.
