More Risk, More Reward.

12 mo (edited)
LeoFinance
2 Min Read
407 words

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There is an important aspect of taking risk in a business and this could either yield you big profits or it likely that a person will lose money on an investment. And still, it is popularly believed that one can’t have more reward in an investment without taking on more risk. In this term, an investment as to do with the purchase of an asset for the purpose of earning money. For example, an Investor can buy some shares of stock and with the hope that the company will profit much from it and that the value of the stock will rise. If the stock does rise as foreseen, the investor is rewarded.

And do you know that you can decided to have more reward by taking a lesser risk, simply by switching from highly risky investments to more dependable ones. You can do this by evaluating every investment from many possible ways looking out for how you could invest to reduce your risk and increase your reward. And often, most traders use this approach to plan which trades to take.

Well, It is generally true that the bigger the risk a person takes, the bigger the reward he or she will receive if the investment makes money and then it goes round, the bigger the risk the bigger problem you get if it’s not manage properly. For example again, If an Investor takes a small risk, he or she is likely to get or earn a small reward. Let me use this simple illustration, If a person buys stock in a company that has been stable for years, like Unilever, that person assumes little or no risk. In other words, it is uncertain that the investor will lose any money and also equally certain that the investor will make a lot of money from the investment. And if the same Investor invests money in a less stable company, for example, an up coming firm, he or she will have a great risk. The company could run out of business within few months and crash. In this case the investor would likely lose the entire value of his or her investment.

One thing to consider in risk taking is rating and weighing the worth and value of the investment before taking any step. Look out for possible mistake that could and prepare for how to manage it.

Thank you for reading

Posted Using LeoFinance Beta


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12 mo

You just nailed it. Before taking a risk, you have to always reconsider your options. But then, the results of taking certain risks are sometimes unpredictable.

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That’s the reason you ought to prepare on how to manage it...since you do not know which angle it will come from.

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Only the bold and the courageous can take big risks. Taking big risks is not for the feeble minded people.

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😂 yeah true... Thank you

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