Understanding investment risk using everyday examples
We always hear about the rewards of investing but people don't often talk about the risks involved. Sometimes it's because they just don't know how to measure them or manage them. Other times it's because they don't want to talk to you about it because they are trying to sell you something.
But here is the truth - there is ALWAYS SOME DEGREE OF RISK.
Should that stop you investing? NO! There is risk in EVERYTHING.
But, risk, properly managed and carefully considered can be your friend because it will open you up to opportunities that others will pass up.
Let me explain what I mean and how I consider risk in my personal investing.
Ultimately, every day you face huge risks but you don't think about it. You trust total strangers with your life and you don't even know it.
You drive through a green light, trusting that the other car will obey the red light in front of it.
You get in a taxi because you trust the driver hasn't drunk a bottle of vodka - but how do you know?