CHASE YOUR DREAMS AND TRANSLATE THEM INTO REALITY

Return is directly proportional to risk
Dreaming about huge returns? Want to convert your dream to reality? Get ready for the adrenaline rush named RISK.

What is Risk?

Risk is the possibility of happening something disagreeable or bad. But remember it is just a possibility.

Risk is not a distressing situation; it is rather an adventurous journey like a roller coaster with lots of exhilaration and fun.

Why do you need to take Risk?
Answer is simple Return is directly proportional to risk.

It simply means “Higher the risk, Higher the return”.

Risk always pays off. If you really want to achieve something enormous in life the pathway is only RISK. It is well said that:

“The biggest risk is not taking any risk …

In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risk.”

Mark Zuckerberg

(Facebook co-founder)

This depicts the importance of risk in our life. A life without risk is a life without growth. If you don’t take the risk, someone else will. It is up to you whether to read the history of great persons or become part of the history.

   STORY BOARD

Let us now understand the risk involved in various investments. Investments can be broadly classified as follows:
1. Government backed investments: These are the investments that are purely supported by the government and are risk-less. E.g. - FD, RD, Treasury Bills, KVP, NSC etc.

2. Other fixed interest or dividend bearing investments: These includes investment options which provide you fixed income but are not purely risk free as not backed by government. E.g. –Debentures, Preference shares etc.

3. Volatile Investments: These include investments changing its value from time to time according to economic changes. E.g. – Gold, Equity shares etc.

4. Virtual Investments: These investments are solely driven by their Demand and supply and are virtual. E.g. –Bit coins.

Above diagram depicts various investments along with their risk. Change of the color from yellow to red shows the increasing risk. Wide base of the triangle portrays higher returns.

FACT:

Return in risk free investments: maximum up to 15%

Return in risky investments: Can be more than 100% or even 1000%

Age vs. Risk

Age is the phenomenon which reduces your ability to bear risk. With increase in age you should move towards fixed returns and minimum risk to enjoy your life with peace. Right time to take risk is when you are young.

Want to minimize your risk, still wants huge returns?

Yes you can minimize your risk and still earn huge returns, But how? Answer is by investing intelligently in multiple investments options consisting of both risk free and risky investments. It is technically called as making a PORTFOLIO. It is well said that:

“Don’t put all your eggs in one basket”

To sum up all we concluded that if you are young, your portfolio should have more risky investments and with increase in your age start investing more in risk free investments.

“THINK BIG
 AND YOU WILL GET BIG”

Thanks for reading the article, in next article we will learn about risky investments in detail. If you haven’t read my previous article link is below.

How to become a Billionaire?