Risk management in investing is so important!

in LeoFinance2 months ago

Risk management

As I have 20 years of experience as an insurance broker, and have a few big portfolios of my customers that go back two decades, I have learnt that risk management is important. Especially if you want to steady returns (with a dip here and there of course). So, I keep on adding HBD to my savings, together with the power up Hive consistently.

I see loads of people that sell their Hive Backed Dollars, and there is nothing wrong with that, because I too believe in the immense upwards potential of Hive. But I also like returns in the shorter run, so those HBD interests are very useful for that. I take the building of my HBD savings as risk-off asset, while Hive tends to be more a risk-on asset. My stack of Hive Power grows slower by this, but I am content with the 20 on the HBD I get. Look at it as, the one bird in the hand and the ten in the sky. I am sure those ten in the sky (Hive) will be in the hand some day too. But I do like that one (HBD) in my hand now too.

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Stock split

Risk management is something that is very different for everyone. It is not a one size fits all thing. For some people, the horizon of their investments is 25 years, for others it is 5 years. That makes a huge difference. In my case, I am sort of a split personality when it comes to my investment horizon. I would love to be financially independent by the age of 50, so I have about 9 and a half years to go. That seems like a very long time, but when it comes to investing, it really isn't. So, I split my risks a bit more, than I used to do. As I want to live a good life tomorrow and next year too. But still with the goal of being financially independent by the age of 50. So the split between Hive and HBD fits perfectly into that to me.

The same goes for my stock market investments, I have "growth" stock in funds, and I have dividend stock, again a split between risk-on and risk-off. A split that fits my horizon perfectly.

This is something that everyone has to figure out for their own, but it is important. You have to ask yourself the questions, what is my goal and what is my horizon. And then you act on that.

Have a great weekend,

Sincerely,

Pele23

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As an investor and trader, I feel kinda silly for locking a stable HBD into Hive Savings when there would be huge growth potential in Hive. But, I am also a business owner and the skill for determining and mitigating risk is like leveraging your wisdom against instability. Definitely takes a lifetime of practice and constant learning to become and stay proficient in risk mitigation.

Now, I know that when I stuff a few more HBD into savings, I am mitigating risk AND earning interest doing it. Win/win.

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I think that the diversify of portfolio is one of the good methods for risk management.

Risk management is the first advice one needs to take when he want to be financially free at some point in life,it helps to manage everything kn a proper manner

Splitting investment and focusing on the long-term goal can sure bring something and reduce the risks.

What comes to mind when you say financial independence?

No amount of money you have without proper risk management that money is as good as finish and that is why is the most important thing when we having money or manage a business

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Risk management is the most important part because you don't want to lose money. Every time you lose out on it, it makes the compounding process even harder. So I would say that people need to make a plan before moving forward blindly.

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