You can only avoid risks if you don’t invest, but that’s not a brave thing to do if you want to get rich through passive incomes. Risks are unavoidable and you will have to face it from time to time. Investors experience different levels of risks. Not everyone has the same level of tolerance so it’s just normal to see a distinction from an investor to an investor when you venture into the investment industry. Now the question is, how much risks should you take when investing? Can you control the risks you are about to face? Is there a way to minimize it? There are a lot of questions on your mind right now and I tell you, one thing’s for sure—you can measure the risks you will take when you invest!
Catch me in my live training events! (quick plug)
The heart of why I do these seminars is I want to build a generation of Filipinos with the right foundation in stock investing. I want to bring smart investing to every Filipino around the world! If you would like to know more about how you could time the market check out the trainings below.
Stock Smarts Manila — June 15, 16, 22, 23, & 29, 2019
Stock Smarts Iloilo – July 6 & 7, 2019
Stock Smarts Cagayan De Oro – July 20 & 21, 2019
Stock Smarts Hong Kong – August 11, 2019
Stock Smarts UAE – August 30 – September 3, 2019
Stock Smarts Qatar — October 3 – 6, 2019
Stock Smarts Taiwan – November 2, 2019
Evaluating your ability to take the risk can help you to minimize the risk level of your investment. Risks are one of the reasons why I always tell people not to invest yet if they don’t have a single clue about what they are doing. If you start investing without any knowledge of your portfolio, say the stock market, the inflation rate, the economic status, etc., you will face greater risks because your lack of awareness adds up to the existing uncertainty. To measure your ability to take the risk, match up your investment goals to your investment capital. If your investment is set to be used for your kids’ education fees or to pay off your debts, the risk you are going to take is lower. On the other side, if you’re young and single and your planning to invest until your retirement, the greater your ability to take the risk.
Now the next question you should ask yourself is—are you willing to take the risk? Let’s say you’ve assessed your ability to take the risk and found out that your tolerance is high, will you brave the market? Not all investors with high-risk tolerance take as much as risks as they could. Some of them do the opposite and the same goes with those who have lower tolerance—they take the risks more than what they can because of the greater return they can get. Always go for what you prefer and to appropriately measure your willingness to take the risk, don’t go far beyond your ability to take it.
Another strategy to help you calculate the risks you can take when investing is by determining what type of investor you are. Are you a conservative one? Are you a risk-taker? An investor who’s ready to take just the average amount of risks? If you’re just new to investing, it would be hard for you to assess yourself. I recommend you to ask for the advice of professionals or take an online exam offered by banks and online investment platforms to see where you fall among those categories of investor.