Learn About Investing
Handling risk plays an important part in the context of investing and there are various levels of risk associated with different types of investment.
If you’re saving cash it’s generally pretty safe in the bank. Your savings may lose value (
Learn About Investing
Handling risk plays an important part in the context of investing and there are various levels of risk associated with different types of investment.
If you’re saving cash it’s generally pretty safe in the bank. Your savings may lose value (if your interest rate fails to keep pace with inflation), but changes in value up or down tend to be gradual.
If you invest in other assets, like shares or bonds, the value of your investment can swing down as well as up. This means you may not get out what you put in. It is generally accepted however that the greater the risk you take, the more reward you’ll potentially receive – with a focus on the word ‘potentially’.
You may not ever eliminate risk, but there are ways you can try to manage it:
Diversification means spreading your investments broadly. The more you diversify your assets the less likely one single event (e.g. a massive drop in shares from one particular sector or a particular country) will affect the overall value of your investment.
Volatility refers to the rate and extent to which the price of an asset (e.g. shares and bonds) rises and falls over time. Although the peaks and troughs can be very disconcerting and uncomfort