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major risk every investor should know

7 Major Risks Every Investor need to Know

by Holistic Leave a Comment | Filed Under: Investments

Investing your money and dealing with the associated risks is a great challenge that every investor must accept in order to reap higher returns.

Market investments are subject to risk (though the intensity differs from product to product). Business supplements and magazines generally print the stories of hapless investors who either lost their money in shares, bonds or mutual funds or whose fund is stuck in the fraudulent moneymaking schemes. It is important for investors to identify the risk and take essential steps to minimize it.

In order to key out and minimize the risks it is vital to know the type of risks applicable to investments. For better understanding, here is the list of different investment risk types. Take a glance:

Market Risk

This risk is associated with the movement in the prices of stock that commonly affects the market as a whole. There are many factors that cause market fluctuation, and natural calamity is one of them. Other factors are the phase of the market – bull or bear. The rising and falling prices of the stocks and bonds determine profit and loss of the investors. If the market is in its bear phase, the downside risk is comparatively low and on the contrary if it is in bull phase the downside risk is more as the market can crash anytime.

Socio Political Risk

Change in government policy, political unrest, international issues (war), elections and change of the government are some of the important elements that affect the market stability. This instability may impose a huge risk on your money/investment.

Liquidity Risk

According to a well-known fact, money has bounded or no value if it is not available when you need it. The ready availability of money is known as liquidity. A successful investment is one that is not only profitable, but also readily liquid. For instance: If you have cash, you can buy anything anytime. But if you have an asset, which cannot be sold in the market due to a justified reason, it is of no use.

Remember, an asset is of a great value only if it can be converted into cash quickly, with little loss. It is good to invest in assets that are reasonably liquid. Otherwise your investment is at a huge risk.

Business Risk

The market value of your shares depends upon the performance of that stock in the market. If you have invested in the company that unfortunately isn’t doing well, the market value of that investment will rapidly go down. When you invest in any company or enterprise, there are chances you may suffer loss or face bankruptcy. The risk associated with such investments may be little or in some cases very high. One common way to avoid such risks is to create a diversified portfolio.

Default Risk

The father of all, this risk refers to non-payment of interest and principal amount. This risk is particularly very high because of the investment in unsecured product, therefore no security is attached. In this case you can do nothing but end up filing a court case. It is good to refer the credit rating of a company before investing in it rather than regretting later.

Interest Rate Risk

Fluctuation in interest rate affects the fixed-rate securities and largely affects the value and returns of your investment. Whenever investors are buying a fixed-rate debt instrument they are exposing themselves to interest rate risk. For better understanding, listed below is an example.

If you have invested in a fixed-rate instrument for 5 years with the interest rate of 9% annually, and if the interest rate goes up to 10% the value of your security won’t go up. Because of the lower yield of the earlier instrument, the value of security comes down and trades at a discount in the market. Therefore, interest rate fluctuations impose huge risk on the investor.

Exchange Rate Risk

It arises due to the change in the price of one currency against another. These risks are mainly faced by companies that have exposure abroad or involved in international dealings. Currently, India is under huge exchange rate risk

How to Handle Risks?

When it comes to tackling the investment risks, it is important to make note of two things:

    1. Not all risks may be applied to a single investment product
    2. At times different types of risks are interlinked.

Gold carries exchange rate risk, government bonds are default risk-free but the returns are low, real estate,carries highest liquidity risk therefore decent returns can be expected.

The presence of all these risks should not demotivate you from investing. Also, the presence of risk does not mean an investment is bad. In fact, investments with higher risk generally fetch good returns. No risk, no returns!

The journey towards wealth accumulation to be easy for you, it is recommended to have a personalized financial plan.

If you want to create a workable financial plan, then I firmly vouch for you to take advantage of
 
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Lingesh MMG
Lingesh MMG
20. September, 2023.
Na eppo tha financial goal la enna therunju kitta..enaku full support panna thuku thank you..🥰 friendly nalla pesuninga...
Ravi L
Ravi L
15. August, 2023.
Very knowledgeable and professional team, guided me with the precise financial solutions and timely suggestions.
Hardik Dave
Hardik Dave
5. July, 2023.
Holistic Investment is really nice and trust worthy financial planner. They plan things in realistic manner and also consider future dimensions of items also. They are always available for small or big queries, and also share knowledge and help you become more financial literate, and take right decisions in all financial matters.
Dr. Padmakar Wagh
Dr. Padmakar Wagh
27. June, 2023.
Mr Ramalingam who is the Director of Holistic investments has a excellent financial planning knowledge, the entire Holistic team has been very helpful in my financial planning journey and execution. This is my third year of financial planning with Holistic investments and so far I am satisfied with the progress I have made.
Binamra Dash
Binamra Dash
13. June, 2023.
Very knowledgeable team. Guided me properly with my concerns.
Murugan Bala
Murugan Bala
16. May, 2023.
I have been investing through Holistic for the past 4 years and my experience with them have been really good. The team of Rajan and Ramalingam doing excellent services in meeting my needs through proper guidance on investment options customized. Theya re always available on any specific needs time to time.I would recommend their services to my friends and colleagues too.
Neeraja R K
Neeraja R K
15. May, 2023.
Working with holistic investment planners was a really wonderful experience for me. For me the entire team had been very supportive in all ways. Their working strategy is well planned and methodical. They always keep me informed and updated about my investments, so that i can take informed decisions. The team first helps us understand the basics of investments, then they collect data, work with the data and then provide investments solutions according to our goals which i find it the best. Good luck to the entire team.
deepika kulkarni
deepika kulkarni
21. April, 2023.
We have availed holistic service from last couple of years and are very happy with our decision. Their systematic approach has helped us plan our finances and meet our goals. They provide very comprehensive and detail plan and resource management every 6 months which ensures we are on right track to achieve our goals. Rajan and Ramalingam from holistic are always there to help us with our queries. They have also accommodated any changes to our goals or resources mid year in a professional manner.
Ashook Panneerselvam
Ashook Panneerselvam
21. March, 2023.
For the past year, I have been interacting with Holistic Investment. I frequently read Nanayam Vikatan, which is a publication owned by the Vikatan family, and I was impressed by their financial advice. My brother also suggested holistic investing, and he also got excellent financial advice. Holistic Investment follows a methodical approach that I really liked because they first fully understand our financial situation "As Is," which includes "Assets" and "Liabilities," as well as our short-, mid-, and long-term goals, on the basis of which they provide a detailed plan on how to achieve our goals for which they are recommending various investment options. Even in the investment advice, why do they suggest particular mutual funds and what is the justification behind it, which adds transparency to the client. One essential factor is that they are always available. Even if I needed to make some urgent financial decisions, they were very helpful and kind to answer my questions via phone calls, WhatsApp messages, and emails. I was very happy with their service. Periodic reviews are also crucial, even though I have forgotten that they occur once every three months, and I also intend to renew this year.
Mahesh S
Mahesh S
19. February, 2023.
I have availed Holistic investment service for last 1yr against my early retirement decision. they provided me comprehensive detailed report how to move ahead with my existing resources. moreover, they are available to me whenever i have any doubt.. highly recommend others to avail their service
Google rating score: 4.5 of 5,
based on 104 reviews

Google Reviews

Lingesh MMG
Lingesh MMG
20. September, 2023.
Na eppo tha financial goal la enna therunju kitta..enaku full support panna thuku thank you..🥰 friendly nalla pesuninga...
Ravi L
Ravi L
15. August, 2023.
Very knowledgeable and professional team, guided me with the precise financial solutions and timely suggestions.
Hardik Dave
Hardik Dave
5. July, 2023.
Holistic Investment is really nice and trust worthy financial planner. They plan things in realistic manner and also consider future dimensions of items also. They are always available for small or big queries, and also share knowledge and help you become more financial literate, and take right decisions in all financial matters.
Dr. Padmakar Wagh
Dr. Padmakar Wagh
27. June, 2023.
Mr Ramalingam who is the Director of Holistic investments has a excellent financial planning knowledge, the entire Holistic team has been very helpful in my financial planning journey and execution. This is my third year of financial planning with Holistic investments and so far I am satisfied with the progress I have made.
Binamra Dash
Binamra Dash
13. June, 2023.
Very knowledgeable team. Guided me properly with my concerns.
Murugan Bala
Murugan Bala
16. May, 2023.
I have been investing through Holistic for the past 4 years and my experience with them have been really good. The team of Rajan and Ramalingam doing excellent services in meeting my needs through proper guidance on investment options customized. Theya re always available on any specific needs time to time.I would recommend their services to my friends and colleagues too.
Neeraja R K
Neeraja R K
15. May, 2023.
Working with holistic investment planners was a really wonderful experience for me. For me the entire team had been very supportive in all ways. Their working strategy is well planned and methodical. They always keep me informed and updated about my investments, so that i can take informed decisions. The team first helps us understand the basics of investments, then they collect data, work with the data and then provide investments solutions according to our goals which i find it the best. Good luck to the entire team.
deepika kulkarni
deepika kulkarni
21. April, 2023.
We have availed holistic service from last couple of years and are very happy with our decision. Their systematic approach has helped us plan our finances and meet our goals. They provide very comprehensive and detail plan and resource management every 6 months which ensures we are on right track to achieve our goals. Rajan and Ramalingam from holistic are always there to help us with our queries. They have also accommodated any changes to our goals or resources mid year in a professional manner.
Ashook Panneerselvam
Ashook Panneerselvam
21. March, 2023.
For the past year, I have been interacting with Holistic Investment. I frequently read Nanayam Vikatan, which is a publication owned by the Vikatan family, and I was impressed by their financial advice. My brother also suggested holistic investing, and he also got excellent financial advice. Holistic Investment follows a methodical approach that I really liked because they first fully understand our financial situation "As Is," which includes "Assets" and "Liabilities," as well as our short-, mid-, and long-term goals, on the basis of which they provide a detailed plan on how to achieve our goals for which they are recommending various investment options. Even in the investment advice, why do they suggest particular mutual funds and what is the justification behind it, which adds transparency to the client. One essential factor is that they are always available. Even if I needed to make some urgent financial decisions, they were very helpful and kind to answer my questions via phone calls, WhatsApp messages, and emails. I was very happy with their service. Periodic reviews are also crucial, even though I have forgotten that they occur once every three months, and I also intend to renew this year.
Mahesh S
Mahesh S
19. February, 2023.
I have availed Holistic investment service for last 1yr against my early retirement decision. they provided me comprehensive detailed report how to move ahead with my existing resources. moreover, they are available to me whenever i have any doubt.. highly recommend others to avail their service
Google rating score: 4.5 of 5,
based on 104 reviews

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