Managing Risk

rightimage_takingownershipRisks exists in any investment you make. Whether an investment with a bank, the share market, property or business . The risk of an investment is 

based on two simple principles: how much understanding and control you have over your investment. In other words if you do not understand what you are doing and you have less control because your money is with other people who make decisions for you then the risk can be quite high.  The following tool can be used to assess risk based on a promised rate of return on a specific class of investment like property or shares:

Calculating Risk v Return

Use the following risk return calculator to assess if your investment is risky.

The key issues you need to address:

  • Really successful people take calculated risks, reflect and learn from their failures
  • Ego or ignorance generally leads to failure, the opposite can be true but you need to be careful
  • You need a plan in order to mitigate any significant issues important to you. How and when you deal with these issues is what matters most.

To answer these questions, you need to ask what is it you need to do. This may mean modifying your needs and wants so they are more realistically aligned to your financial capability or change your financial capability.

For Ideas to improve the returns and managing your practice Read on…

David DahmManaging Risk