What is risk?

Risk is an inherent characteristic of all investment activities and is the antithesis of return. Generally speaking, the higher the investment risk, the higher the return, provided that the investment is successful. You can manage risk, but first you must accurately identify the risk.

Where have you heard of risk?

As an investor, risk will be an eternal topic between you and your financial advisor, who will continuously evaluate your "risk appetite". The financial media will discuss new sources of risk, whether market risk or economic or political risk.

The information you need to know about the risks...

Risks can be divided into many different types. One is liquidity risk, where you manage the risk of illiquid assets such as real estate that cannot be liquidated quickly. The other is interest rate risk, which refers to changes in interest rates that may affect the amount of return on your bond investment.

If you buy corporate bonds, there is a risk that the company will not be able to pay interest or repay the principal, I .e. credit (default) risk.

Mitigating risk first requires correctly identifying the risks in your portfolio and then taking steps to hedge your position through derivatives or contracts for difference (CFD).