The poor are poor, the rich are rich

Chapter 109 1 Risky investment, starting from understanding risk

Chapter 23 Take a little risk and invest
Chapter 231 Risky investment, starting from knowing the risk

No one wants to invest in a loss-making business, and everyone is eager to get a corresponding rate of return as much as the cost invested.However, most of the time, this is just a good wish of investors, because we will be engulfed by risks in all directions at any time.Investing is a risky activity. If you want to make a big return on risky investment, you must have a deep understanding of risk.

Simply put, risk is the uncertainty of loss: first, it may lead to loss; second, this loss is uncertain, whether the loss occurs is uncertain, when the loss occurs is uncertain, and where the loss occurs is uncertain. The extent of the loss is uncertain.

Only by approaching risks infinitely and understanding risks can we avoid risks and invest successfully.

In general, the common investment risks are as follows:
1. Financial risk: Financial investment, such as stocks or bonds, will cause the stock price to drop or fail to distribute dividends due to the poor start-up of the issuing company, or the bondholders will not be able to recover the principal and interest.

2. Market risk: The inaccuracy of market changes often causes losses to inexperienced investors.Taking the stock market as an example, whether the market is prosperous or not will often cause the price of holding stocks to fluctuate, causing losses to investors.

3. Interest rate risk: It has the greatest impact on bond investors. A rise in interest rates will cause bond prices to fall and cause losses.

4. Purchasing power risk: Inflation will depreciate money and lose its original purchasing power. If the investment profit cannot keep up with the inflation rate, it is losing money.

According to the individual status of investors, it can be subdivided into:
1. Risk of principal loss: Whether it is due to market factors or the merits of starting a business, there is a risk of loss of principal.

2. The risk of loss of income: the investment cannot obtain the expected income, such as the rent cannot be received or the dividend cannot be distributed.

3. Risk management: Taking real estate investment as an example, if you buy a house for rent, the investor must start a business and manage it himself. If the management is neglected, it may cause losses.

4. Liquidity risk: When money is urgently needed, the investment product should be converted into cash in a timely manner.Generally, bank deposits, bonds and most stocks can be realized quickly, and the liquidity risk is low; while real estate and collectibles are realized slowly, and the liquidity risk is relatively high.

5. Interest rate risk: For those who have loan debt, rising interest rates will increase the interest burden, unless it is a fixed-rate loan; for retirees who live on interest income, lower interest rates will reduce income.

There are no high-return, zero-risk investment opportunities in the world.If someone recommends a high-return investment opportunity with no risk to you, don't even think about it. He must be a liar.

Most investors invest with spare cash.Spare money, that is, the money that is not in a hurry to use for the time being, and the rest of the money beyond the basic living, can be regarded as spare money, and it is the safest way to invest with this money.Because even if you lose everything, it won't have much impact on your life.

Investing is like life is impermanent, and there are too many impossibilities in the investment market: today's stock price soars by thousands of points, and when you wake up tomorrow morning, it suddenly plummets by thousands of points again, with ups and downs.Those who can laugh at the situation are only those who have the worst plan to invest with their spare money; those who also use their living expenses to fight, after making mistakes, they really don't think about eating and drinking.

Successful investors have sufficient psychological preparations to calmly face the ups and downs in the investment market. Investments will inevitably have success or failure. They have the worst plan, and even if the worst thing does happen, they can withstand it. If you have the courage to fight again, you will not be depressed because of this.

(End of this chapter)