HOW TO MANAGE YOUR INVESTMENT RISK

If you invest in stock-related methods to obtain high-return portfolios with unbalanced risks, you may not be on the right path. Every investment faces certain risk factors, and the biggest mistake investors make is to ignore risks.

Here are some ways to avoid or manage these risks:

Manage asset allocation well

While the asset allocation of your investment portfolio is primarily based on stocks, credit, and cash, it is also based on a number of personal factors such as your age, risk tolerance, economy, and your financial goals. Therefore, asset allocation is not only about stocks and debt, but also about your opinion. For example, financial advisers offer a variety of advice to people in their twenties and fifties. Whether a person is married and has children, or is single and independent, advice for people of different ages can vary.

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Every investor has different risk requirements and different financial objectives. Based on the results of the risk assessment and the duration of its objectives, each investor must decide which assets to invest and how much to invest.

Diversify your investment

If you diversify your portfolio into different investment products, the risk of the entire portfolio will be reduced. For example, suppose you invest 30% in A stocks, 20% in insurance, 30% in term deposits, and 20% in real estate. If the A share price goes down, your loss is limited because 70% of your investment is made by other means.

Your investment should vary depending on the financial goals you have set for yourself. Compound interest is earned by establishing unrelated investments to achieve the preferred risk/return objective. Diversity is particularly useful for smoothing production. However, investing in a large number of assets related to the size of the investment portfolio can lead to excess productivity.

Monitor your investment regularly

Sometimes, the asset allocation you made a year ago may not work under current market conditions. In this case, if you monitor your investment from time to time, the risk of investing in your portfolio may increase. Therefore, tracking your investment becomes very important. You need to evaluate this in a timely manner, because it can restore your investment portfolio to the correct asset allocation, thereby reducing risk.

Determine your risk

When you invest in the market, everyone has the ability to take risks. When investing, the risk is determined by age, income, dependents, etc. “Investors tend to take risks. It will stand out when the market falls. Knowing your fears and tolerance in your portfolio is important to avoid emotional turmoil and suffering. Your money will help a lot.
If you can apply this simple steps your risk will be well managed.

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