By Asante Isaac
Risk is inevitable in our journey to invest on the stock market. The level of risk you bear determine the reward you might get. Is it good to bear risk all the time? Alternatively, can risk be eliminated in investment?
The term risk should not be bearing all the time nor can it be eliminated. Our job hear is to find ways this risk can be reduced to the bares minimum. The first thing we can do whenever we are on the stock exchange is to avoid been greedy. Greedy is in two folds, that is, holding stock to long to sell and trying to make quick profit.
Non-greedy investors have their cap rate/percentage for which they use to get out of the market. Never believe that holding on to non-performing stock will dramatically change things. You are the master of your financial success on the exchange. In this regard, sell your stock when it reaches your upper ratio and opt-out when it fall below. You are not on the exchange for nothing; you are there to make money. In view of this, do not entertain anything that fall short of your threshold.
The act of making quick profit is equivalent to speculation as well as gets rich quick mantra. When you know yourself to be a conservative in your investment strategy, do not dabble in speculative investments you do not understand. In addition, when you know you are tortoise do not ran the race of rabbit. Most people deceive themselves of making big brake by taking chances. The investment mantra that says higher gains go with higher risk cannot be overruled.
Another quickest way to reduce the risk factor in your investment is to accept your bad judgments and make amends. I can equate most of us to a driver whose car is going into a ditch and he has no way to stop it. We usually allow little financial mistake to consume our mind to the extent that we hardly stop it. What you need to do here is to examine the error and estimate why such error came about. This will mean going back to your drawing board to review your calculations because it could be that the market is wrong or you are wrong. When it turns out that you are wrong, do not hesitate to opt-out. Do not hold on because there is an impending dividend payout.
The last thing you should do is to develop tick skin so that the little risk will not discourage you. This is because no matter which level of investment you are you will bear risk in its various forms. Starting out in investment is like how a child walks- they craw, sit, stand and start few steps and fall and eventually master walking. Therefore, you been an investor do not cry over the mess that has gone by. Above all, be objective. Be flexible and do not be guilty of prejudices in stocks.