Risk and Investing

Risk for investors is the possibility of losing some or all of your original investment when you invest in certain financial products. Depending on the performance of a company, the value of the company’s stock can rise or fall, and with it, the value of investors’ holdings. Determine your own tolerance for risk in your investments by considering what you are possibly willing to lose in order to gain larger rewards in the future, and do research to understand what you can lose in different circumstances. You can find information on investment risks on government financial regulatory websites or financial industry websites, or by looking for online courses for beginner investors.

Is your time horizon short-term or long-term? In general, for certain investments like mutual funds, you could take larger risks if you have more time for investing and if you diversify, that is to spread your investments among different types of products. There is no guarantee though of returns except in the case of the safest investments like government bonds, and even then, it depends on the country issuing the bonds. So understanding risk is a good first step to picking which investments are right for you.