Understanding Investment Risks

Doing Investment, RISK is the most important involvement in Returning from investing. Risk is brother and sister to your investment profit where most investors have to worry but face to deal with in order to gain more and more. The more returns, the higher risk investment will meet.

Understanding Risk will allow you to know:

1. Risk Definition
2. Risk Management 
3. Types of Risks
4. Risk Measurement

1. Risk Definition:

- Risk anything you don't actually know.

- Risk anything you know it will happen, but not exactly what, when, where, how, why?

- Risk anything you might already predicted, and you are waiting, which one will come first or how huge / small it is.

- Risk anything you thing you can deal with it but not exactly 100% right.

2- Risk Management:

There are 4 types of managing Risk:

- Risk Avoidance

- Risk Transferring
- Risk Acceptance (Risk Averse Investors)
- And Risk influencing by Time (Step Dealing Method).

3- Types of Risks

There are two types of risk: Systematic and Unsystematic Risk

However, they divide these two risks into smaller pieces in order to understand each risk carefully and clearly.

There are 8 risks to be considered:

- Market Risk

- Interest Rate Risk

- Business Risk

- Regulation Risk

- Purchasing Power Risk

- Re-Investment Risk

- International Risk

- Liquidity Risk

4- Risk Measurement

Economists define how you can measure risk. However, the follow methods can be used in different ways and also effectively up on kind of investing you are running. It can be workable or you might use many and many other methods to measure risk, i.e. Risk Observation , etc.

The three applicable risks:

- Measuring using : Volatility

- Measuring using : Standard Deviation

- Measuring using : Beta

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