Investment Risks You Must Know (1)

In the investment world, risk is inseparable from performance and, rather than being desirable or undesirable, is simply necessary.

1. Mismatch risk
Trade the wrong investment products which doesn't suit with investment budget. Or investing in something that is inappropriate for your investment needs

2. Inflation risk
The risk that the rate of inflation will exceeds the rate of return on an investment. For example, if the rate of inflation is 5% over a year and the rate of return is 3%, then the investor has effectively taken a loss even though investor has made a profit in absolute terms.

3. Interest rate risk
The change of interest rate may decrease the return of investment. This may happened when current interest rate is lower than the interest rate when you invest.

4. Market risk
The value of investments may increase or decrease over a given time period simply because of economic changes or other events that impact large portions of the market. It means that your return of investment can increase or decrease at such a time.

5. Market timing risk
Market timing risk is different from market risk. Market risk affected all investor however, market timing risk is the risk that an investor takes when trying to buy or sell a stock based on future price predictions.

"Risk comes from not knowing what you're doing." - Warren Buffett