Risk management is key to successful investing, protect your capital while maximise returns. Understanding and managing risk leads to better investment decisions. Here are some key tips.
1. Know Your Risk
Before you invest, know your risk based on your financial goals, investment timeframe and emotional ability to handle market volatility. This will guide your investment choices and asset allocation.
2. Diversify
Diversification is the best way to manage risk. Spread your investments across different asset classes, sectors and geographies to reduce the impact of a single investment going bad. A diversified portfolio will give you smoother returns over time.
3. Set Stop Loss
Use stop loss to limit losses on your investments. By setting a price at which you will sell an asset, you can protect your capital from big dips.
4. Review and Rebalance
Review your investments regularly and rebalance as needed to keep your portfolio aligned to your risk and financial goals. This proactive approach will keep your risk at the level you want.By doing this you can manage risk and make better investment decisions.
