"Risk comes from not knowing what you're doing!" Warren Buffett (1930 -)
We often listen to people who are reluctant to invest in the stock market because they are afraid of risk. There are elderly people who fear that a stock crash could leave them. Destitute There are young couples who yearn for a new home, but worry that losing an investment could kill their chances.
For an investor, the risk is a fact of life!
When opening an opportunity for you to make, you also have to do with the fear of the possibility of suffering an investment loss. Investment earnings Even with "safe" types of investments, such as bank deposits, there is a risk that the rate you earn will not exceed the rate of inflation higher.
Often these fears rooted in a misunderstanding of what the risk is. Those who understand the market risks - and their ability to tolerate to properly evaluate them - to their investment portfolios to choose a degree of uncertainty boost by!
In finance, risk reflects the uncertainty and it is measured by the standard deviation of the norm.
Many people would say the riskier investment is the first, because their would be. Important in greater danger But to professionals, the initial investment is just stupid - not dangerous - because it is sure to lose a thing!
However, what worries many is that you never know when the stock market dive. What if it falls well before you need to sell?
Most people measure their risk and potential for loss, but the risk is measured by the variability of returns!
In other words, because the stocks have higher average returns, you can lose and still end up suffering some enormous progress in the long run.
There is only one situation where adding files to your portfolio does not make sense - if you do not have time to let the market work for you.
In a given year, you have about a 1 in 4 chance of taking a loss on the stock market. If one year or less, as long as you are planning to invest, stocks down on a gamble.
But if your time horizon is five years or more, there is a very good chance that putting at least a portion of your money in shares, to raise the performance of your investments
One question you have to solve is the kind of investment risk you pick comfortable. The choice ranges from conservative to aggressive, with a wide middle between the extremes.
Conservative Investing: Does money stabbing where there is little risk to principal.
Moderate Investment: Does taking risks by stabbing money in growth stocks and bonds.
Aggressive or Speculative Investment: Does taking a potential risk of losing part of your investment in exchange for the possibility of making a larger profit.
The equalizer is a good chance that you have to work for the balance between the different risk categories.
One of your concerns should be that if you invest conservatively, you will not have enough money on the way to afford your goals, even if you have been diligent in following your plan.
Another concern is that by taking too many chances you risk losing too much of your capital.
Ioannis - Evangelos C. Haramis was born in Greece in 1951 and studied in Greece, the U.S. and Belgium. He has been active in the equity markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank and the editor of
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