Before investing, do we understand the risks?
📌 8 financial risks you need to know and prevent by planning
Because "understand risk" is the first step of "financial stability."
1. Market Risk (Market Risk)
📖 risk of market changes, such as stock prices, interest, currency values.
💡 How to Reduce Risk: Spread investments in multiple asset classes, such as stocks, bonds, or mutual funds.
🛡️, supplemented by collectible life insurance or pensions, helps lock in some absolute returns in the port.
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2. Credit Risk (Credit Risk)
📖 The risk that the debtor or issuer cannot pay the debt.
💡 How to Reduce Risk: Check the Issuer's Credit Rating, or Select a Diversified Fund
🛡️ supplemented by savings in life insurance policies, which are underwritten by insurers.
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3. Liquidity Risk (Liquidity Risk)
📖 can't sell assets immediately without losses.
💡 How to reduce risk: Divide some of the money into easily sold assets such as deposits or money market funds.
🛡️, a cash-back life insurance that allows for short-term "cash flow"
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4. Inflation risk (inflation risk)
📖, the value of money fell, lost the purchasing power.
💡 How to reduce risk: Invest in assets that yield above inflation, such as stocks, gold, social funds.
🛡️, supplemented by pension life insurance that increases pensions every year to keep income up to inflation.
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5. Systematic Risk (System Risk)
📖 inevitable risks such as an economic crisis, high interest, or war.
💡 How to Reduce Risk: Make a Balanced Port (Asset Allocation) Hold Multiple Assets
🛡️ Life insurance / health insurance is the last bumper when an event hits earnings directly.
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6. Unsystematic risk (individual risk)
📖 Risks posed to a particular company or industry.
💡 How to Reduce Risk: Spread Investments in Multiple Industries, or Choose Mutual Funds
🛡️ is supplemented by income insurance, such as accident or serious disease insurance, so as not to rely on income from a single job.
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7. Operational Risk (Operational Risk)
📖 Risk from internal systems or people's mistakes.
💡 How to Reduce Risk: Check Work Systems, Have Backup Plans, and Cash Reserves
🛡️ Reinforced by Business / Property Insurance for Entrepreneurs Prevent Unexpected Damage
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8. Political risk (political risk)
📖 risk of government policy, political change or war.
💡 How to Reduce Risk: Diversifying Multi-Country Investment (Geographic Diversification)
🛡️ supplemented by long-term life insurance or accumulation of assets to create stable assets, not based on politics.
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"Risks happen every day, but a good plan will give you control of it."
🛡️ start by knowing the risks and choosing the tools to suit life.
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