Smart Investing: Five Ways to Reduce the Risk of Investing
As seen in Financial Express on March 11, 2020
Financial Express details five ways an individual can mitigate different investment risks. They include:
Due diligence: It is important that before investing in a stock, one checks earnings growth, PE ratio, debt load, etc, and then compares it with other stocks.
Capital allocation: Out of the total capital available, assign amounts to different classes of investment like debt, equity, or a mix of both depending on the growth requirements of capital.
Portfolio diversification: This includes the selection of various investment products which helps in alleviating the risk of substantial capital loss.
Monitoring portfolio: At times of lower interest, the price of debt securities moves up and could provide an opportunity for a switch in the portfolio.
Blue-chip stock: to ease the loss of capital and avoid liquidity risk, it is ideal to stay invested in a bellwether stock or fund.
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