InvestorQ : What are the commonly used risk factors while investing?
Roshni Hegde made post

What are the commonly used risk factors while investing?

Jignesh Gupta answered.
1 year ago
An investment must always be properly planned with clear objectives. While doing so, an investor must consider the various financial products in his planning. However, one must be aware that investment comes with risk. These risks vary with different product. More is the risk higher is the potential to earn profits.
As risk is inherent in nature in every investment, few risks are taken into consideration;
Business Risk- The only risk that most of the investors go through is a business risk. As investment is linked to the company's earnings report. Thus the fear of lowering the company's value surrounds investors.
Allocation Risk- Proper asset allocation must be taken carefully. Management of risk allocation and fees relating to the investment in your retirement account by investing low fee target date fund.
Political Risk- At times, Due to any changes in the political environment returns of investors suffer. Factors like changes in government, legislative bodies, other foreign policymakers or military control affects Investment returns Political risk is also known as "geopolitical risk".
Dividend Risk- Generally, when the company cut its dividend the risk arises with the value of the stock. Thus, respective dividend holders make their move to other dividend-paying names.
To sum up, before investing an investor must make it a priority to evaluate the risk involved. Seasoned investors know that It doesn't take much time to lose money so manage your risk and make best out of it.