We hear a lot about ‘risk’ and generally have an internalised idea of what it means, but in finance risk can be specific, it isn’t just about ‘losing money’ or the risk upside where you make money.
Risk comes in different forms and has different effects depending on how you are affected, we’ll take a look at a few kinds.
Investment Risks Investment risk is the risk that on maturity or encashment of a financial product the return is less than expected or is less then actually invested. There are several reasons why investments might not give the expected return, some of these relate to the risks below, but bear in mind there is always a ‘risk of doing nothing’ which is generally a symptom of opting for safer assets that underperform other choices.
Market / Systemic Risk If there is a general fall in value on the stock markets, or in whatever market you invested in. We have seen many of these in prior years, gold had a huge downside risk for buyers in the late 70’s when prices …