What Are the Risks and Downsides of Investing in the Stock Market ?

In this article, we present to you an explanation of what are the risks of investment and the concept of investment risks pdf and what are the advantages and disadvantages of the stock exchange and a graduation project entitled The risks of investing in securities Wikipedia and what are the disadvantages of investing in the stock exchange 2021 - 2022

When it comes to investment risks, many questions are asked, and in general, it is not possible to accurately define investment risks

The truth is that all types of investments contain a degree of risk so that stocks, mutual funds, bonds and exchange-traded funds can partially or completely lose their value in the event that the market situation deteriorates

Also, insured investments such as certificates of deposit issued by banks are also subject to inflation risks

Know the risks of investing

It is the possibility of losses related to returns, according to the expectations of the investor, and there are many who are looking for what are the risks of the types of investment risks.

The types of risks are many and varied, including:

market risk

Market risk is the risk that an investment will lose its value due to multiple economic events that affect the market in general

Liquidity risk

These risks are the inability to sell securities at a fair price and the inability to convert them into cash in the market. In this case, the investor may be tempted to sell them at a low price and lose their value.

Concentration Hazards

It is the loss of the invested amount as a result of focusing on investing in one security

In these risks, the investor loses the entire invested amount as a result of concentrating on one banknote

credit risk

It is a default on the payment of bonds issued by companies or the government

Therefore, the bond issuer may face some financial difficulties in his inability to pay the interest and the amount of money to the investor

Reinvestment risk

It is a risk of losing the highest return on capital due to a decrease in the interest rate, according to the market and the decisions of the institution

Inflation risk

This risk is a loss of purchasing power because investments do not return profits higher than inflation

Longevity risk

They are risks related to exceeding investments and savings, especially those related to retirees or people who are close to retirement

horizon dangers

These are risks related to the investor himself as a result of personal conditions such as marriage, losing a job, buying a house, and this is what calls for shortening the investment period

In the end, all investments carry a certain percentage of risks, but by understanding these risks in depth, the investor can contain these risks and manage them better.

Read also:

How To Work in the Stock Market Online : Important Tips Before Investing in Stocks

Basics and Principles of Investing : Top 10 Rules of Successful Investing

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