Investing without risk: Is it possible?

Investing without risk: Is it possible?

More and more people today want to achieve maximum returns by starting investing without being at risk. Unfortunately, investing without risk does not exist. No matter how safe and responsible you invest it, there is always risk involved. Of course you also have a chance of very nice returns, but the risk cannot be ruled out. Fortunately, you can minimize the risk you run. But how can you do that the best? We answer this in this article.

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Is investing without risk possible?

We can answer this question very simply with a no. There are always risks associated with investing. Whether the risks are objective or subjective, both create an undesirable situation. In addition, it is also possible that you lose your investment partially or even completely.

How can you minimize the risk?

As can be deduced from the text above, it is almost impossible to invest without risk. However, it is possible to minimize the risk. But how can you do that the best? Below are a number of points that could contribute to minimizing the risk, among other things.

1. Determine risk appetite

First of all, we would like to consider determining your risk appetite. It is of course very important to consider how much risk you are really willing to take. You can best determine your risk appetite on the basis of an inventory of your personal situation. This can be easily mapped to three key topics:

Investment target

In any case, it is important to have in mind what your investment goal is. Why do you choose to invest? Are you doing this for an extra source of income, to build up a pension or to leave assets for your children/grandchildren? You should also ask yourself what your investment horizon is: when do you want to achieve your goal?

Personal and financial situation

It is also very important to map out your personal and financial situation. If you are a person who would lie awake at night because of a sharp fall in the stock market, then it might be better for you to invest in investment products that carry a little less risk. For example, investing in real estate or bonds is much less risky than investing in options.

It is also important to consider how much money you actually have to spend. We keep repeating it for a reason: a long-term vision is required for successful investing. If you know that you need the money in the short term, then it is not very wise to invest with that money.

Knowledge and experience

Finally, it is important to look at the amount of knowledge and experience you possess in the field of investing. At first glance, investing seems very complicated. However, that doesn’t always have to be the case. A healthy interest in investing and sound preparation can often already provide a stable basis. In addition, it is of course also true that if you have insufficient knowledge, you can engage an investment expert who will take the work off your hands.

It is very important to ensure that all of the above information is kept up to date. Your personal preferences and goals can always change. But your income and wealth situation can also change. We therefore definitely recommend that you go through the above points every year and answer the questions again for yourself. This makes it much easier to respond to personal changes in a timely manner.

Do you have insufficient knowledge but are you interested in investing? Then schedule an intake here with one of our experts who can help you further.

2. Invest in spread

It is certainly not recommended to invest all your money in one investment product. We definitely recommend diversified investing. Spreading your investments ensures a more stable development of the value of your investments. As a result, you have less to deal with large outliers in both a fall and a rise in the stock market. Even if the result of one investment is disappointing, this can possibly be compensated by another investment. Diversified investing is without a doubt one of the most important ways to limit investment risks.

3. Deposit money regularly

In addition to investing diversified, it is also very wise to regularly invest your money in parts. You can easily do this by, for example, consistently depositing a certain amount every month. By regularly investing your money in parts, you reduce the risk of investing your money at the wrong time. By investing an amount each time, you simply lower your purchase price, which significantly reduces the chance of possible losses.

Would you like to learn more about applying this method? Then read our article about Dollar-Cost Averaging.

These are a number of general points that could each contribute to minimizing the risk involved in investing. Unfortunately, by carefully applying the above points, the risk cannot be completely avoided, but fortunately it can be minimized.

Finally

You now know that investing without risk is impossible. Investing always involves risks, but those risks can easily be minimized. Even for people who are extremely risk averse, investing can continue. However, it is important that you map out your risk appetite, that you invest in a diversified manner and that you invest regularly, that you adopt a long-term vision and that you keep your personal and financial situation up to date.

*On the basis of this article, we do not encourage anyone to start investing. This article is not written for advisory purposes and is not intended as any form of expert (financial, tax or legal) advice. This article is purely for conveying knowledge and information. Thriven is therefore not liable for the correctness or completeness of the articles.

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