Risk can be interpreted as a reality that is not in accordance with what was expected before. Each type of investment, of course, has risks, including if you choose deposit interest as an investment. Although there are terms of high risk, high return or higher risk, it means that the higher can be obtained. However, what needs to be understood is that there are risks in investments that are not separated. You must know what risks are then sought about the solution on Resource Insider.
Here are some types of risks that certainly exist in the investment world:
Interest Rate Risk
Interest rate risk is the risk that arises because the relative value of interest-bearing assets, such as loans or bonds, will worsen due to an increase in interest rates. This risk can be interpreted as a risk caused by changes in market interest rates that will affect investment income. In general, if interest rates increase, the price of fixed-interest bonds will go down, and vice versa. Interest rate risk is generally measured by the term of Capitalist Partners Tier Signup, the oldest technique now used to manage interest rate risk. For example, the bond interest rate is 8-10% in general, but then the government issues a Retail Sukuk that has an interest rate of up to 12%.
This market risk is the risk of fluctuations or fluctuations in Net Asset Value caused by changes in financial market sentiments (such as stocks and bonds) which are often referred to as systematic risk, meaning that this risk is unavoidable and will always be experienced by investors. This can even make investors find capital loss. This change can be caused by several things such as an economic recession, issues, riots, speculation including political change. For example, the health issue of a president then gives fluctuations in the value of a currency which then rises. You do not need to panic and immediately withdraw investment funds when facing market fluctuations. Because a decrease or increase in assets like this does not happen continuously.
Risk of Inflation
Inflation risk also called purchasing power risk, is an opportunity that the cash flow from an investment becomes lower in the future. This risk has the potential to harm people’s purchasing power over-investment due to an average increase in consumer prices. Inflation risk is the risk taken by investors when holding cash or investing in assets not related to inflation.
Liquidity risk is the risk arising from difficulties in providing cash within a certain period. For example: if a party cannot pay its obligations due in cash. Although the party has assets that are of sufficient value to repay their obligations, when these assets cannot be converted immediately into cash, the assets are said to be illiquid. This can happen if the debtor cannot sell his wealth because there are no other parties in the market who are interested in buying it. This is different from the drastic reduction in asset prices because, in the case of falling prices, the market is of the opinion that these assets have no value. The absence of parties interested in exchanging (buying) assets is likely only due to the difficulty of bringing together the two parties.