Many individuals don’t realize as to how big of a roll risk can play when it comes to investing their money.
Risk is based on economic changes that are not in our control. Stock prices, interest rates, currency exchange rates, commodity prices are examples that could make our investments vary in our returns. Risk gives the opportunity to our investments to fluctuate and lose value on our investment.
HOW DOES RISK AFFECT YOU?
Many people save for their retirement in the 401k account or via managed funds. Both of these invest at least a part of their cash in stocks and other financial instruments. The value of the stocks these funds invest in can go up or down and you could lose part of your principal. This is something that all investors need to understand.
HOW CAN I HANDLE RISK?
Risk needs to be understood first. Generally any investment scheme that offers higher returns carries correspondingly higher risk. It is important to balance the two at a level you are comfortable with. The risk you can take also depends on your age and state in life. If you are young, you can generally take more risk whereas as you get closer to retirement, you need to conserve you funds and take fewer risks with your savings. Everyone’s risk profile is different.
If market risk is a concern to you, there are solutions where you can secure your financial future where market risks can be eliminated or reduced when it comes to accumulating assets for our future. You may sit with a financial professional to properly guide you through the process.