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When it comes to risk involved with investing, one tends to think that the main risk is not getting one's money back. Yes, the risk of losing money does exist, however, it is not the main type of risk associated with investing. The primary risks involved are uncertainty and unpredictability. When you make an investment, it is difficult to say with any certainty what you'll get back when you finally sell of the investment. This is because for example because markets change, stock prices fluctuate and interest rates go up or down.

Understanding risk will help you identify the different types of risk which will ultimately help you identify your own attitude towards it. This approach will help you pick instruments that suit your risk profile.

It is a well-known concept with investing that risk and reward go hand in hand. The rule of thumb states that the more risk you are prepared to take, the higher the potential reward. You must decide what level of risk you are personally willing to take. If you are not prepared to lose any of your money under any circumstances, then you have to accept that your expected return can be lower than with a more risky investment.



  • The primary risks involved with investing are uncertainty and unpredictability
  • Understanding risk will help you identify your own attitude towards it and help and making suitable investment choices.
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Mutual fund investments are subject to market risks, read all scheme related documents carefully.