All investing involves risk and it’s something that you cannot avoid. In fact, trying to avoid risk could severely hinder your chance of becoming a successful investor. You could be limiting your investment’s potential growth by not accepting some degree of risk.
Many investors are aware of the risk of losing some or the entire amount invested. Another important risk is the failure to generate enough investment earnings to have the investment keep up with inflation – this means the investment loses its purchasing power over time.
As an investor, you need to understand the different types of risks involved with investing and recognise the level of risk you feel comfortable with, rather than avoid risk altogether. You will provide yourself with a much better change of achieving your goals by carefully managing risk.
The first and perhaps, the most important step, is to understand your attitude and tolerance to the risks. Consider your past experiences with investing…
1. How do you react when sharemarkets or property prices fall suddenly?
2. Do you redeem your investment at the first sign of trouble?
3. Do you rise out the ‘storm’ for the expectation of better returns over the long term?
4. How long at you willing to invest your savings for?
5. Are you prepared to accept more risk for greater returns?
6. How soon do you want to reach your financial goals?
A longer term investment can help you weather periods of market volatility – time tends to smooth our short term market fluctuations and can put sudden declines and gains into perspective.
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Disclaimer: The information in this notice is current at the date of preparation and does not take into account your objectives, financial situation or needs. Because of this you should, before acting on the information, consider its appropriateness, having regard to these factors and, where appropriate, consult your financial adviser or obtain other independent professional advice before acting on the information. This information is current at June 2014. Past performance isn’t a reliable indicator of future performance. You should carefully consider the relevant PDS applicable before deciding whether to acquire, continue to hold or dispose of investments . This information is intended as a guide only; it is not exhaustive and does not constitute legal advice or otherwise.
Source: Asgard – Axis Magazine July 2014 : Moving in the right Direction
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