What is Risk?
Wikipedia says that risk is nothing but the potential that a chosen action or activity will lead to a loss (an undesirable outcome). It also says that almost any human endeavour carries risk, but some are much more risky than others.
Consider the concept of risk, when we talk about finance. Financial risk is the probability that returns on your investments will be variable. This includes the outcomes that the returns can be better than expected (gain = good), and that returns can be worse than expected (loss = bad). To sum it up, risk is nothing more than a state of uncertainty, of more than one possible outcome.
When you invest, risk is inherent in almost everything that you do.
This is partly because there are so many types of risk from market risk to interest rate risk to country risk and many more. The trick is to know 2 things, both of which are equally important.
First, which risks can you diversify away?
Second, how much risk can you afford to take?
Read more:
How Much Risk Can You Afford?
Wikipedia says that risk is nothing but the potential that a chosen action or activity will lead to a loss (an undesirable outcome). It also says that almost any human endeavour carries risk, but some are much more risky than others.
Consider the concept of risk, when we talk about finance. Financial risk is the probability that returns on your investments will be variable. This includes the outcomes that the returns can be better than expected (gain = good), and that returns can be worse than expected (loss = bad). To sum it up, risk is nothing more than a state of uncertainty, of more than one possible outcome.
When you invest, risk is inherent in almost everything that you do.
This is partly because there are so many types of risk from market risk to interest rate risk to country risk and many more. The trick is to know 2 things, both of which are equally important.
First, which risks can you diversify away?
Second, how much risk can you afford to take?
Read more:
How Much Risk Can You Afford?