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What is RISK and how you can manage it

In investing, risk comes primarily from these four aspects –

Inability to sell your investment – Liquidity Risk

Possibility of capital loss – Market Risk and Quality Risk

Possibility of returns lower than annual inflation – Inflation Risk

Focus on a few securities only – Concentration Risk

Specific portfolios can have additional risks, in general, if you are an active investor, these are some standard risks that all portfolios face.

Your job is to manage risk.  If you don’t want to or not able to, then you need to manage your managers. If you don’t manage your managers, then they will manage you!

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