In the world of investment, the terms risk and return cannot be separated, these two words will always be linearly related or risk will always be proportional to return. The greater the assets we place in investment instruments, the greater the risk and return. Therefore, when you make a decision to buy an investment instrument, it cannot be done by trial and error, guesswork or just based on luck. Investors also need to understand the concept of risk and return by choosing the right type of investment instrument for themselves, so that it suits their risk profile, investment objectives, financial conditions, desired investment period and creating an investment strategy to mitigate risk. Have you applied the concept of risk and return to your investment?
The Concept of Risk and Return in Investment
- Thread starter Suba
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Everyone of us have different risk appetite. I mostly go for a low risk investment. I do take the calculated risk but never cross the limit of my risk appetite which is low. It's true that higher risk comes with a promise of high return. But then one should have that risk appetite. My financial situation does not make me feel comfortable taking a huge risk.
It's very important to go through the terms and rules well before taking any decision to invest. If you read the rules and terms carefully, you might find many hidden things that generally miss our attention unless we pay full attention to them. Reading between lines is very important. One has to analyse the risks and returns well before taking any steps.
Yes, understanding risk and return is important in investment. Generally speaking, greater risk may bring higher return. Everyone making investment should know his or her own investment appetite. I am a conservative investor. I just buy blue chip stocks, mutual funds and government bonds.
I agree there is moderate amount of risk in any business activity you pursue if we go for fixed deposits it is lower if we go for stocks higher if we go for efts we can go to hell zero in a mere day so all people can take risk according to appetite .
Investment is always associated with risk and losses. The higher the risk yhe higher is the possibility of higher returns but higher chance of losing. I am a. low risk investor because I don't have that much money to spend so I am on the conservative side where I make sure my investment is intact and making small gains.
Risk does not only happen in business and investment but in all actions we intend to do if not properly thought about. Like my business, the milk tea business I am acing risk this time after the local city health department made a public announcement not to drink milk tea because it contains drug addiction chemical and people believed. I am at a losing risk.
it is indeed efts and forex are high risk gold is low risk commodities is high risk investing in bonds and cash is low risk so it depends on the taste and greed of the investor
