February 25, 2018

Investing For Beginners, Stock Markets, Bonds, Mutual Funds, Precious Metals

Risk And Reward For the Beginning Investor

If you are visiting this website chances are very good that you want to make money in the stock. Before we go much further lets discuss risk. Before you invest on dollar in any investment vehicle you need to understand there is measure of risk associated with your investment.

The degree of risk varies from investment to investment and as we have discovered recently with the ebb and flow of financial markets. Investing for beginners in stocks, bonds, or mutual funds carries risks of varying degrees and all investments are risky.

That being said there are ways to reduce risk and still maintain a decent return on your investments, but understand this, high rates of return bring with them high risk concerns. CD’s and Money Market funds will keep your investment safer and reduce risk, but it also reduces your potential reward.

Every investor has a risk threshold. How much risk they can live with comfortably and it is different for each investor. Each defines what is acceptable risk and should be a priority for any beginning investor. Everyone needs to sleep at night and not held hostage to high levels of anxiety caused by worrying about their investments.

Hint: if this is happening to you already, its time to change your approach. When you find your own comfort zone, you’ll know your personal risk tolerance, the amount of risk you are willing to tolerate in order to reach your financial goals.

Investing in stocks on a long-term basis will help lessen the risk, but not eliminate it completely. It would be better to choose some lower risk investments as a beginner and let your investing philosophy evolve over time.

One o f the biggest issues for beginning investors is the inevitable question of; Is this the right time to get into the stock market?  Consider your goals and motives for investing in the stock market. Define a plan and then work the plan and risk and reward will take care of itself.

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