Up and Down – how much you are willing to risk?

The  beginning of the year 2016 has been a challenging time for the global economy. China’s decreased economic outlook and low price of oil barrel has increased uncertainty in the markets.

For example; at the Helsinki Stock Exchange the beginning of the year has been worst in several decades.

Kuva1

 

Every investor knows that investing always involves its own risks. The Risk will be formed by what is investors expected return. The bigger the risk is the larger the expected returns will be. And before making investment it should be clear for the investor how much risk he is willing to take.

When markets are unstable, it is good to stop and think of what we know about the risk.

  1. The Risk is not only a threat

Risk is also the source of profit. If there are no risks involved, there will be no  yield.

  1. Diversify your own stock portfolio

This is done by diversifying your property in several different investments,  such as shares and debentures. Several different investment variations are less risky than investing in individual investments.

  1. Ask yourself: how much money can I lose before it affects my daily budget or I start losing sleep?

That is one way how you can estimate your own tolerance of risk.

At  the moment we are seeing the bad side of the risk, the side which every investor hates. But I hope that you all remember that there is also the another side of the risk too. And that side is bright and rewarding.

 

Sources:

http://www.kauppalehti.fi/uutiset/osakemarkkinoilla-uuden-aikakauden-merkkeja/xWpQMCAY

https://www.theseus.fi/bitstream/handle/10024/31663/Aho_Ville.pdf?sequence=1

Kiinan heikentyvät talousnäkymät heiluttavat rahamarkkinoita

 

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