Risk Management in Your Investment Portfolio

Risk and Gain move hand in hand; thus, typically, greater the risk an enterprise or individual undertakes, higher the chance of returns one can expect. It is, at the same time, seasoned investors understand well that managing risk is always important than taking enhanced risk to make excess profit. And, this is where the necessary of risk management relating to investment comes into the picture. Many investments are less risky such as public bonds or equivalent commodities while stocks, mutual funds, securities are extremely risky but have potential to return more out of your investment.

This is where the function of financial analysts like Anouk Govil comes into question. They help organizations, establishments to individuals to take calculated and perfectly analyzed risk but not go for uncontrolled investment risks. Since all investment opportunities carry certain risks of different natures from minimum to maximum, a high level understanding of different risk factors is crucial.

The major risk issues underlying with investment issues are of different types. Among them one of the most terrifying is default risk involved with investments. This basically refers to non-payment or default issues where apart from the expected interest receivable, the principal also suffer. For all kinds of unsecured loans, meant by company deposits or promissory note investments are rather risky. Typically, since no security is attached with these investments, enterprises just cannot do thing but to take legal actions against the defaulter to get back their money. To avoid this risk issue, you should consider the credit rating of a company before making an investment decision in debentures or deposits.

Business risk is also among highly feared investment. The market value of investments in equity or stocks depends largely upon the company’s performance where you invest. In case, the company encounters loss or suffers from any management difficulty and cannot show desired performance, its share market value will automatically come down. Fraud within the company, use of outdated mechanisms, and supply of inferior quality products or change management are great causes of business risk.

There are various bonds which have proviso that enables a business enterprise to repay or call back bonds early. Although this will not lead to major loss of principal, however investors may face adequate loss. Individuals concern with 401(k) should essentially manage risk as they come closer to their retirement.

Knowledgeable financial analysts such as Anouk Govil recommends that when you’re younger you can take higher risk, however, that should be well planned and allocated to investment instruments with expert advice. This will help you keep your investment portfolio well protected with low risk. According to her, in financial management, the fast availability of money refers to liquidity.

Before taking an investment decision, one should just not consider how much protected and profitable the investment is, but its liquidity potential should also taken into consideration. Typically good investments are those which can be liquidated or converted into cash fast, even though there is a bit value loss. For her great client services Anouk Govil has earned a good popularity to enterprises and individuals as a competent Financial Analyst. She is fond of kayaking, fishing and music.