Business & Finance

Risk vs Return: Investment

Risk vs Return

Most of the investors or traders want to make investments in a way that they get very high returns and that too as fast as possible without any risk of losing the principal money they have put in. Investors are always on the lookout for top investment ways where they can double or triple their input in few months or years with little or almost no risk. However, it is known that no such investment exists where there is low risk and high return rate.

Both these things go hand in hand, directly proportional to each other. Higher the risk rate is more the return rate an individual can expect out of it. People with low earnings do not think of investing money anywhere rather the just save it in the banks or in the wallet itself. Middle class families do save a portion of income as savings which they usually put in the banks as Fixed deposits. Some families go for the mutual fund market. Mutual fund market is open to risks and losses but also give out good returns. Investing in mutual funds is buying some shares of a firm which you think will perform well in the coming time and which would profit you. Once you buy some shares of a company or firm, you will be the part of all the profits or losses that company makes.

Investing in mutual fund does not mean that you are investing in stock market, it means that your money is being invested in different places so that if you face loss from one place, the profit from other part of the investment would make for it. Other than mutual fund, Stock Market is also an option to invest money where one can see very high return rates but the risk also goes very high.

A stock market is an exchange where stock brokers or investors could buy sell and shares of bonds, stocks and other securities. Almost every large company or firm has their stock listed on a stock exchange these days, which makes the stock look more attractive and transparent to the investors. For investing in stock market an individual needs a broker, who will invest in the market on your behalf. A broker can be of two types mainly, one is Discount Brokers, who will buy or sell, will do whatever you say related to the transaction or investment but won’t give you any advice regarding which stocks are good to invest in and the second is a full-service broker who will give you every advice regarding what needs to be done and where you should invest and what are the things you should take care of.

 He will advise you with his experience in the field and will also charge you accordingly, a heavy part of your return will be his share of helping you out. So for the freshers it is better that they go for full-service broker, so that they could understand the market properly rather then just entering the market with no experience.

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