3 Most Feared of Investment Risks

Do I dare to take a risk in investing? This question may often be thrown when you are considering to do an investing on your personal financial planning. Let's say you have the money of USD1000 in your budget, and you are confused whether to put it in a bank or other investment instruments. If it placed in the bank, you might feel safe. But sometimes, the offer of investment in other places are often quite large and very tempting, so it is sometimes frightening you.

When we say investment, there must be a following risk. There are a lot of risks. But we could summarize them in 3 most feared of investment risks.

1. The fall of Investment value

Generally, the most feared risk when investing is "Will my money be lost?" Most people might answer "no" when asked like that. Surely, it is because that nobody willing to lose money. However, the problem is, there is always a risk in every investment product. The difference is in its size. There are investment products that the risk is big enough, medium, and some are small. Clearly, one of the most feared man, once again is: "Will my money be lost?"

Okay, now if you invest, how much value that you are willing to decrease if you lose? 10 percent? 30 percent? 50 percent? Or 100 percent? Regardless of the loss you are willing to bear, remember, it is part of investing. Do not ever expect you will continue to profit. Loss must be experienced occasionally. And we learned from it

2. Difficulties to sale the investment product

The second risk of the most feared investment risk is whether after bought the investment product, it becomes hard to resell. Some people may be happy to invest in gold, because gold is considered easy resale. However, there are also people who invest in foreign currency, such as Euro or Pound sterling. After bought the currency, they quickly put it to the bank. This is because when the currency kept in the closet, then the physical condition of paper may be decreased. And it will be difficult to be sold again one day. Understandably, some banks often do not want to buy your foreign currency when the condition of the paper of the money is torn, damaged or crumpled.

Another example of an investment product that is not always easy to resell is the antiques goods collection. These collections are generally not always easy to resell. This is because the buyer of these goods is very specific market. Painting, for example. Because of its specific-market, it is not always easy to sell the painting. But, once sold, could have a very high price and provide a considerable benefit for people who sell them.

So, before you decide to invest, find out first how easy of an investment product able to sold back. Do not let your investment hard to resell, because it is difficult to sell.

3. The provided investment yield is less than the increasing price of goods

Imagine if you invest in term deposit that provide 10 percent interest a year. Whereas in that year, the price of goods actually increased 15 percent? This often happens, not because of too high price increases for goods and services, but because of the selected investment product itself is not necessarily appropriate.

What should you do to deal with this risk? What will be to put on your personal financial planing ?Do not close yourself to the information. Learn about other investment products that you may not know, and then try to go into it. Considering all the consequences. For the time being, you can surely overcome the high rising prices of goods and services by investing in products that are potentially able to provide higher yields than the price increases. So these investment risks will not affect you a lot, because you recognize them and have a solution on your investment.

Happy investing :)

Related Post