Every investment comes with some level of risk - but managing that risk is what separates smart investors from lucky ones.
In this guide, you’ll learn how to assess, control, and make peace with risk based on your goals and time horizon.
What Is Risk in Investing?
Risk is the chance that an investment will perform differently than expected - including the possibility of losing money.
It’s not something to avoid, but something to understand and manage with intent.
Common Types of Investment Risk
- Market Risk: The risk of your investments losing value due to overall market downturns.
- Volatility Risk: How sharply an investment's price fluctuates over time.
- Liquidity Risk: Difficulty selling an asset quickly without a major price cut.
- Inflation Risk: Losing purchasing power if returns don’t outpace inflation.
- Concentration Risk: Having too much of your portfolio in one asset or sector.
How to Manage Investment Risk
- Diversify: Spread your investments across different asset classes and industries.
- Know your time horizon: Longer time frames can absorb more short-term risk.
- Match risk to your goals: Align your strategy with what you’re investing for - retirement, a home, or passive income.
- Review and rebalance: Periodically adjust your portfolio to stay within your comfort zone.
- Use Investron's AI: Our assistant can help identify risky concentrations or suggest adjustments based on your profile.
Remember:
The goal isn’t to eliminate risk - it’s to take the right amount of it for your situation. The more you understand it, the better decisions you’ll make.
