Don’t Lose It All: Managing Risk When Investing - Finances Demystified

Don’t Lose It All: Managing Risk When Investing

Risk is all around us. 

Falling in love – risky. 

Starting a business – risky. 

Taking a step into a casino – yep, risky. 

Our current culture acknowledges risk and encourages people to forge through despite it. 

We all want our voices heard, we all want to quit working jobs that don’t recognize our brilliance and we all want to stand up for what we believe is right – all actions that require some amount of risk. 

But, we know the risk is worth the reward. 

Why then, does risk ALWAYS come up as a reason someone isn’t ready to start investing? 

Because we are trained that money is not something to gamble with, and if you don’t understand investing then it can feel like gambling. 

As a financial planner, financial literacy advocate and founder of Finances Demystified, I spend a lot of my time showing people the exact strategies that reduce risk from investing and make it accessible to anyone, regardless of whether they have $10 or $10,000,000 in the bank. 

With a little training, anyone can easily see that investing is just as exciting and life-changing as falling in love or starting a business. A risk that is undoubtedly worth the final reward – financial freedom. 

So, how exactly do you manage risk when investing? Read on for some of my top tips! You can also take my free investing masterclass to learn more about the exact strategies I use in my everyday life.

Managing Risk When Investing

1. Diversify, diversify, diversify

The best way to mitigate risk when investing is to ensure you diversify! If you invest every available dollar into a single company; if that company dips, your entire net worth dips right along with it. 

Keep all your eggs spread amongst several baskets. 

Diversifying your investing goes beyond simply investing in multiple companies. It also means that you should diversify the types of investments you make; from long-term stock buying to options, mutuals, investment accounts specific for your children and more! 

If you want a run down of the main investing types I use, check out this free masterclass on everything you need to know to get started with investing.

2. Choose Companies You Believe In 

If you have an iPhone in your hand right now, it’s highly-likely you don’t believe Apple will ever fail as a company. In fact, you’ve entrusted them to be in business for long enough to be the sole holder of a lot of things you attach value to, like your photos, contacts and more. 

So, wouldn’t Apple be a good company to invest in?

When you choose companies you believe in and already follow, you’ll be a savvier investor than trying to understand what might increase or decrease the value of an oil and gas company. 

Look at a list of publicly traded companies, then look around your house. You’ll be surprised how many companies and products you use, love and financially support by buying their products you could actually own a piece of. 

3. Consistency Matters the Most 

 Some people wait to invest until they believe they are financially ready to invest, which typically means they are sitting on enough excess money that not having immediate access to it with their debit card wouldn’t be a big deal. 

Unfortunately, all that waiting for the right moment is losing money. Thanks to long-time growth and compound interest, the sooner you start, the more you’ll make. 

Anyone can start investing with as little as $5, so the amount you invest doesn’t matter as much as the fact that you are investing. This is not only a smart decision, but a way for investing to be more risk-free because you may not be as attached to $5 every week as you are to thousands of dollars. 

If you want to reap the rewards of investing, you have to start somewhere and you have to accept that risk is an inherent part of it, but not something to fear. 

Invest wisely, LEARN before you jump and you’ll soon forget that risk was ever a factor holding you back from a life that benefits from investing. 

Take my free investing masterclass for a run down on the whys, hows and don’t lose it all strategies that I use in my everyday life to support myself and my family.

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Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical performance results have many inherent limitations, some of which are described below. no representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.