9 Answers: How can I make money investing without risk?
Question
Hi my name’s Mia and I am interested to know if there is a way to make money in investing without big risks. My tolerance is quite low. But you know what I have heard is that what happens is an investor buys a diversified portfolio and so maybe one goes down but two go up and so this creates a kind of “hedge” I think…
Would like more info on removing the risk part of investing and making money doing it!
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Investing Advice
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Answers ( 9 )
There will always be some associated risk to any investment. Risk / reward
Yes there are ways of mitigating risks
Get the understanding of a risk and reward. You see risk is the other side of reward or I guess reward has the other set of risks.
And if you want a bigger reward you want a bigger return the need to take on more risk.
So for example all know that like stocks are more risky or them Bonds is the idea.
So stocks can go up and they can go down you know much more so than bonds can also go up and they can also go down just a more narrow range of you know of risk in their own what might be called volatility whether the prices are changing so if you are taking on more risk in a traditional it’s a portfolio of investments you know stocks would be more riskier than bonds and that’s the idea that stocks should then give you a better return because you take on more risk and over time they do.
So that’s the good news with risk is that you control the amount of risk you want to take.
You can choose how much stock you want in your portfolio or bonds or cash or real estate or precious metals gold whatever it is that you want to have in your overall investment portfolio.
You get to decide that and you can decide how much risk you want to take as part of that if you’re maybe a younger investor and you have a long time horizon and you want to be more risky.
Well heck you can take on more stock for example maybe 80 percent or perform more might be in stock.
The exact opposite may be maybe you are retired or you’ve left the workforce and now you’re living off the income of your investments while you might be much less than stocks.
Maybe your 20 percent or 10 percent of stocks.
Maybe in some cases no stocks depending on what your life expectancy is going from there.
But the idea is that you’re managing that risk can you control that and over the long term you know risk is reduced so if you think about buying a stock or a stock mutual fund you’re on the short term in a new day or a week.
You know the prices change wildly and go up and down quite a bit.
Same thing over months or quarters.
You know they can have much more volatility or change within a stock.
That’s why it’s more risky but over many quarters are over a year or reportedly over several years maybe a decade.
You know that risk gets flattened out and becomes less volatile over time.
People have done this for hundreds and hundreds of years…
Hedge your investments so that you can sleep at night and make money regardless of market conditions.
You can do this as well whether you’re a new investor or just starting out: learn how others have succeeded and learn from it.
You know some of the best practices these top investors have been putting into practice. Following the concepts of the best like Warren Buffett, Carl Icahn and the rest of the best will really help you and maybe you start investing where you’re a long term investor.
Go back to those basics so while these concepts we’re talking about. Things like investing in Index funds and also in specific stocks as well as bonds too.
Maybe there will be some downturn for you it’s like OK for the long term, this is all going to turn out well.
That’s the idea and you can do this because others have done it why can’t you do investing in it’s core principles which can be very simple but takes some thought and takes some discipline.
Next is develop your own goals and plan (maybe you already have) revisit those thing.
What am I investing towards? Maybe it’s financial independence or retirement or saving for children’s college education or university education whatever it is you understand those schools you understand your plan you understand the time horizon how long you’re in to reach that plan.
And then understand your risk and reward around that so you can build your plan around it.
Just take a simple action step maybe from something that might have inspired you from this post.
I hope so.
I have been learning a lot and while I am not an expert this is true I know that risk and reward and together two sides of the same coin. There can be no reward without risk, and with risk you can have reward.
Cold but true.
Jessica G – she always cold player
Risk is an inherent part of investing. Managing risk.
However it is very wrong to say that the more risk the more reward because it is not true. Sometimes very high risk investments like some junk bonds for example do not even carry a very good yield.
There is always risk in investments however things like REITs and ETFs carry less risk compared to investing in individual stocks for example.
risk is inherent in investing hun