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Investment risk seems to be directly related to how much or how little forethought is needed for the investment
If you have money to invest then there is a whole world full of investment products out there for you.
The more traditional investments are known as stocks and bonds. These investments are similar to investing in a savings account, except for that you stand to gain a higher return. However the chance of higher returns comes with more of a risk than a savings account.
A savings account within a bank is a fairly safe place to put your money. There are very few ways in which you can lose your money, with the most prominent being if the bank goes bust. A few years ago, losing your savings through a bank going bust was unthinkable, but since the RBS bail out, people are more aware of the risks. If a bank goes bust then you can lose all of your savings, but in most circumstances the worst that can happen is that your money is worth a little less when you withdraw it from the bank. This happens when inflation rises faster than the interest from your savings account. For example if you put in £100 which will buy you twenty bags of cement. Then a year later you with draw your savings of £100 plus the accrued interest of £15, but £115 will only buy you 19 bags of cement. You have walked away with more money (numerically) but the money you have is worth less now than when you put it in.
Other than savings accounts, there are stocks and bonds. These may be no more or less risky than putting money into a savings account. The difference is that investing money into stocks and bonds takes a little more thought. You have to decide where you will buy your stocks and in which company, or in which country you will buy bonds. If you are fairly perceptive and know a lot about the markets then you can make more educated guesses as to where you put your money and it will be as safe as if it were in a savings account. On the other hand you can take a few risks and possible loose all (or some) of your investment, or make a bigger profit on your money.
A less traditional manner of investment is to put money into real estate. When you do this is takes a lot of forethought and planning and the risks are fairly high in most cases. You have to pick a place to buy and then hope that the upward trend in the property price continues until you decide to sell, which is when you receive your profit from your investment. Some companies such as Falcon International Estates may purchase dilapidated properties and flip them for a larger profit. This strategy is a very successful one, but is also very risky an should only be done by experts such as those at Falcon International Estates, because it involves working out all of the angles and doing a lot of research prior to the purchase, to ensure that plenty of profit is realised when the property is sold.
In conclusion, it seems that investment risk is relative to how much of a decision you have to make when investing. If your investment takes little forethought or decision, such as savings accounts, then your risk is fairly small. If your investment is something such as investing in real estate, then the risk is higher, as it is relative to your own judgement and prior forethought and research.
Article Summary : This article explains how an investment risk seems to be related to how convoluted the investment is. A savings account takes little forethought and is fairly risk free; where as investments in things such as real estate should be left to the experts at Falcon International Estates.
Author Bio : Janifar Brown is a freelance content writer by profession. She finds immense pleasure in writing Investment related articles including Falcon International Estates .