What is the risk of losing your hard-earned money?
Well in life there are no true guarantees, so when you enter into any form of investment you need to understand that you can do your best to calculate the risk and to make the best informed decision in entering into the investment or not. But at the end of the day there are certain uncertainties that can arise and change the picture completely. This is why, in my opinion; you want to have the experts in control of the situation, if it ever does arise.
So when you enter into an investment you have to come to terms with the fact that there is a certain amount of risk involved, and each investment will have a different level of risk attached to it. However keep in mind the old phrase that if it sounds too good to be true, it most probably is.
Your biggest risk that you can be exposed to in any investment is that you will lose your hard earned money. How this happens in most cases, is when you purchase something for more than what it is actually worth. So before you enter into any investment, don’t just take your best friends advice around the braai, about the great investment he has just entered into. Go and do your homework and see if the value of that investment still has some value in your opinion. If you feel that the investment still offers great value for money, then go for it, if not, stay clear.
Understanding Investment fluctuation is key to your investments growth
What is investment fluctuation?
Investment fluctuation is a term that is used which explains the movement of the price of the particular asset that you have purchased. The value of the investment can increase, but it can also decrease as the asset is impacted by what is going on in the economy.
The fluctuation (UP AND DOWN MOVEMENT OF THE INVESTMENT) of your investment is what we call Volatility.
The riskier the investment the more chances there are for volatility in the investment.
What is very important to keep in mind is that volatility is not what loses you money, it’s when you sell your investment during a very volatile stage of the investment that can lose you your hard earned money. If the markets are volatile during a certain time of your investment, it’s better for you (most of the time, except in extreme cases) to wait out the ups and downs of the market and get more stability.
All Video Clips and pictures supplied by Allan Gray
July 18, 2014
Grant van Zyl