Several Types of Investment Risks

Several Types of Investment Risks

The world of investing is very much open to risks. Investors are exposed to several types of risk that they alone may encounter in any way possible. However, investment risks does not mean that a certain security is bad. But knowing them would rather be a benefit because traders would know how to act on them.

Here are some of the known investment risks that you may encounter.

Market Investment Risks

There are several types of market risks alone. Generally, they all are affected by economic developments/issues which can affect the value of your investments. Three of the most known market risks are the Equity Risk, the Interest Rate Risk and the Currency Risks.

Equity Risks is a type of market risk that you may encounter when a market price fluctuates. The demand and supply of a certain security affects market prices. And most of the times, the movements of such varies. This means that if you don’t know how watch the demand and supply movements, you are opening yourself to risks.

You can also encounter Investment Rate Risks in the market, especially in the forex market. For instance, when a certain rate goes down, then a specific market would suffer. And if you are part of this market, then the chances of meeting the risks is just as high.

You may also face Currency Risks in the the forex market or, if you simply have foreign investments alone. To cite an example in the market, say that own US Dollar shares. If the value of such becomes lower, then you are losing.

Investment Risks
Risks are natural in investing. That is why knowing each of them would be beneficial to your investments.

Liquidity Risks

Liquidity risks is defined as the inability or difficulty to sell or buy a certain asset. Sometimes, you may not even get to sell your investment at the price that you want. You may sometimes have to sell them at a lower price as well. It is also possible that you may not be able to sell some at all.

Inflation Risks

If your shares fails to keep with the rates of the inflation, then the chances of losing is bigger. In certain cases, you may own shares in a certain company that had less consumers due to it. This can affect the performance of the company and consequently, your shares would suffer as well.

These are just some of the known risks in investing. If you know these investment risks, than you may have good chances of success in the market. It will also help if you own an investment plan. Having one is a must anyway. And if you have one, then you have a better grasp in risk management.

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