Not all investors have to take risks when investing. Some investments are "risk-free".
For every investment there is a range of potential returns. The investment can be summarised by:
In any liquid market, i.e. an investment market with a sufficiently large volume of investors, the expected return and the risk will be related. Higher expected returns and higher risks go together.
Why is this the case? Simply because investors will assess investments. If this risk of the investment is high then they will be willing to pay less for it, so the price will be driven downwards. With a lower price the expected return is higher. In a liquid market with plenty of investment options, investors will choose investments with a higher return for equivalent risk or a lower risk for an equivalent return. As such, the risk and return become clearly related.
Risk and return can be plotted on a chart. On the right hand side of the chart will be projects with high risk and high return. On the left hand side will be projects with low risk and low return.
On the left hand axis are investments with no (or very little) risk. Such investments are termed "risk-free". A typical example of a very low risk investment is a government backed bond (where the government also controls the printing of the currency - so can bail themselves out).
"Risk-free" investments offer security but typically low returns. As the returns may not keep up with inflation their real return may be negative. Whether such investments are truly risk-free thus depends on the perspectives and liabilities of the investor. Investors looking to receive higher returns are generally happy to accept some degree of risk. This explains why most investors take risks when investing - for the associated higher returns.
Not investment advice - please do your own research.
The way I see it, "risks" are just a part of the "work" that must be done.
See the way the world is set up is that nothing comes free. And nothing comes free because resources are scarce and human wants are unlimited. To determine who gets what one must work for it, the way the system works.
If something exists willy-nilly and one need not do any "work" to get it, then that thing automatically loses its value or has never even had any value to begin with-
This is a reason why to get any coin--I mean cryptocurency now-- you have to at least get some "work" done - viz the proof of work systems like bitcoin. And if it isn't proof of work then its proof of stake or proof of "brain". All these in a way are still a sort of work.
Consider the proof of stake, for example, seeing as it is the one that comes the closest with your question. Stakes are investments. And then the share of coin you get in this systems-- that adopt proof of stake--and your influence in general, depends on the amount of "stake" you have; the amount you have invested.
Now stay with me.
You would see that basically this is just being employed as a more efficient way to replace the "work" system--either the real life physical work that depletes your body and energy, or the virtual "work" that eats up electricity and computational power.
This is what an investment is. A substitution for "work".
And just as in any work, there is also in investment a sort of risk involved. You're basically putting yourself out there and hoping you'd get a compensation for your work. A commensurate compensation, mind you. Meaning the more work you put in, the surer your return and the more it would be.
It is basically the same with investments. The more you invest the lesser you can make your risks and the more you're likely to earn.
The why is easy. Resources are scarce. Nothing is guaranteed. To get the scarce resources you have to put something in--your work or your money. To be on the safer side put in more work and/or more money.
Now I should mention that there is a curve you probably reach that makes your risk reduce a hell of a lot towards non existence. But you have to be able to put more money to get that.
For instance in hedge funds. Hedge funds are basically a way for you to "hedge" your investments and make it a whole lot safer. Hedge fund managers are experts who are skilled in a lot of methods of hedging your investments and making sure you have a certain return. But like I said, you must be willing to put in a lot of money. That in itself is the "work" for your safety XD So everything still comes back full cycle.
I suppose its the rule of nature. And you know like they say, you can't cheat nature. But you can sure as he'll try.
The act of investing itself IS taking risks.
Definition of the word "invest:
"Expend money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property, or by using it to develop a commercial venture. " (Google)
There is no such thing as zero risk in investing. In order to invest, one must expend resources (doesn't need to be money) with the hope that they will eventually able to acquire more resources (or more valuable resources) compared to the expended ones.
The profit from investments come from the risk the investor willing to take to gain it. Investments with higher risk tend to be more profitable compared to investment with low or almost non-existent risk. If the risk from high risk investment doesn't come with high profit of course no one will be willing to take the risk. Investment is still affected by the law of the market.
To invest is to take the risk. Why is it a risk to invest? First, you are investing your resources or your hard earned money so it's a risk to put them into gamble to gain more or to lose what is given.
There are several things to put into consideration that the investor needs to consider which identifies whether the investment is worth taking risk for or not. To take the risk is not just simply jumping both feet on the cliff and not knowing what's the bottom of the ground.
Most of the successful man took the risk but we should know that there is a very valuable education that we need to understand before we learn to take the risk and put our resources at risk and then losing them. Let me share to you my strategy on how risk should be taken.
As a winners perspective they don't run to the field and lose the battle the same way in investing your resources into any establishment or market goods. There are two kind of risk in the same way there are two kinds of investor.
Let's talk about taking the risk first before we talk about the investor.
First is what I called, "Blind Risk" . This is the most dangerous risk of all. It is when you take risk without considering important factors that could extremely put your investment into danger. Let me share an example to shed a better light of this thought. The best that I can example is that a story of farmer who planted the seeds of the crop in a drought season. The seeps cannot grow and simply dies and the farmer loses his resources and wasted his efforts and labor. This is a Blind Risk. When you do not consider other factors that could affect your investment and even put your resources into havoc. It's a total shipwreck.
Second is what I called "Calculated Risk". This is the kind of Risk where the investor takes time to evaluate the market and consider all the possible factors that could affect the investment and eliminate them or if not avoid them before taking the risk. This is a very wise move for every investor to calculate all the possible factors and consider all areas that could possible harm the investment. Taking time to analyze and study the movement of the market before putting your resources into gamble will surely give you advantage to gain much more than what you have invested.
Now that you know my wisdom about taking the risk most probably it will be easier for you understand the next topic I am going to share which is all about the investors character. I will share to your the two kind of investor then mirror yourself at the end what kind of investor you are.
First is Foolish Investor. There are a lot of rich folks playing the market and some of them are nothing but a fool who simply throws out their resources into gamble without knowing what kind of risk they are taking. Some are simply showing off their wealth while other are totally innocent investing strategy who simply tried their luck and not knowing what exactly they are doing. A lot of them loses their resources simply because they are like a fool running without knowing the end. Foolish investor is clear enough that they are hook into "Blind Risk" investment.
Second is the Wise Investor. Mostly those who are successful at the same time remaining humble and silent are the wisest investor in the business industry. They know what they are doing and they know the game they are in to. Wise investor runs their investment with meticulous consideration of all the aspects that could hinder the growth of their investment. The engine of their investment is nothing but a "Calculated Risk." Clear enough on what I have mentioned above that this strategy are for those who has the winners perception who do not simply run into battle to fight but to win. Using the "calculated risk" strategy surely wins and brings success.
This is what an investor should be. A successful wise investor!
i see it as a must and those who research well and honed their skills improve their risk/reward ratio.
imagine if there's no risk, all the money in the world will stay forever with those that already have it. money doesn't flow. inflation will be hell
The question is quite simply simple.. Because the higher the risk taken, the higher the rewards to be gotten from investing.. So therefore all investors takes risks because of the risks. If they don't take risk at all, their returns will be very low. But they can lessen the magnitude of their risk by diversification of their investments.. By diversification of their investments, there are less open to higher risk but they can earn higher rewards.. Therefore, investors just have to take risks if they want to earn big in their business
I am not an entrepreneur neither have I own an enterprise but risk is practice in our everyday life and from these I have gained knowledge on risk taker and it impact. Though as an entrepreneur , one is adviced to take only reasonable risk. One problem in investing is "we don't know the future nor outcome of what we invest into" but it's better to take a risk than not, because it's a risk not to take a risk. Those who play save never grow nor do they learn new things, they remain stagnant and never successful than they already are.
So an investor should take a risk because of the following reasons
1. Learn what works and what doesn't
2.grow above fears of failure and strive higher
3.most success comes from risk
Many people have not invested. In fact, they already have high income, and have future dependents, including the needs for their children later.
Usually, people like this don't dare to take risks. Keep in mind, every investment must contain risks, whatever the instrument. Let alone investment, every action we take must have risks. But that does not mean we cannot avoid risk.
The following tips can be potential investors who are ready to face risks:
GET TO KNOW YOUR PROFILE
Everyone has a different level of safety in investing. By analyzing and recognizing risk profiles, one can set acceptable risk limits and choose investment products that make it comfortable. Because in the end, the most important thing for an investor is being able to sleep well at night.
CONSIDER A COMPANY THAT IS CLEAR
Many types of investments offer attractive schemes, but they do not have clear permits. Before considering, make sure the company offering investment has a business license from the regulator. If the form of financial products, of course, the license is from the Financial Services Authority (OJK) and if the form of futures or futures is licensed from the Commodity Futures Trading Supervisory Agency (Bappebti).
In addition, reputation and track record can also be a reference. Some of the best companies or products will have a history of awards that shows consistency in performance and success.
KNOW THE CAUSE OF RISK
Every seller must explain everything that is good about the product. Often, marketing sales lure a high return on an investment.
Keep in mind, the return and risk are like the same two coin eyes. For example, there is a product that gives 10% return per month. That is, he can give a 10% loss a month. So, be critical to find out what causes it. What is the cause of the increase? If the conditions turn around, what's the risk?
To add information from the seller, let's take time to learn from books or the internet and take the time to take seminars or public courses.
SELECT THE PRODUCT ACCORDING TO PURPOSE
Choosing investment products is like choosing a vehicle. Similarly, investment. For short-term purposes, use safer instruments such as deposits or bonds. If the goal is still long, instruments that are more risky, such as stocks can be an option.
But, if done the opposite (short-term in stocks, long-term deposits), it will be the same as taking a plane to Puncak or taking a car to Bali. Arriving is unclear when and actually even more risky.
SPREAD THE RISK
The last way is to minimize risk. Spread risk or the term "diversification". This can be done in two ways: spread the product and spread the time. In other words, invest your funds in several products and gradually.
So the risk is not concentrated in just one product. The funds should not be invested in large quantities at the beginning. But, divided into several parts in a certain period.
All investments, there are risks. But not investing has a greater risk. The important thing is to understand the risks and make him your friend in achieving the goal. Are you ready to invest?
I will answer to this question in only one sentence.
"TAKING RISK CAN LEAD YOU TO SUCCESS".
You don't need to take risks when you delegate Steem Power to a project. Except the exchange rate risk that the dollar value of your Steem might drop.