The changing nature of money is only one facet of the financial services revolution.
Investing in capital markets is associated with various risks. It is essential to develop an understanding of the risks of investing, financial instruments and financial services. The purpose of this document is to convey such an understanding.
Risk is about the probability and possible extent of losses of an investment. An investor must accept the possibility of taking losses in the investment process.
To be able to choose an investment strategy you should understand the importance of the three pillars of successful investing: Return is the measure of economic success of an investment which is expressed in gains and losses. Security aims at preserving the value of the investment. The security of an investment depends on the risks associated with that investment. Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset’s price. Return, security and liquidity are inherently linked. A secure and liquid investment will, as a general rule, not generate high returns. A secure investment generating relatively high returns will probably not be liquid. A liquid investment generating high returns will regularly provide a low security. All in all, an investor must weigh these goals against each other depending on his/her individual preferences as well as personal and financial circumstances.Read More
Although it is not possible to predict what is going to happen in the future, it is possible to manage your exposure to different risks within your investment portfolio, to a certain extent. Our role is to design portfolios that can withstand shocks whilst still offering the opportunity for returns. However, market conditions may limit our ability to trade certain assets in your portfolio.
Diversification is one way in which portfolio risk is managed. This is because different classes of assets are affected by different risks to different degrees. If the risk is spread across many different assets and asset classes, it is unlikely to affect all at the same time and to the same degree.
Real Estate as an asset class may comprise investments in residential, commercial as well as special purpose real estate. The investment may be made directly by acquiring real property or indirectly by investing in real estate funds, REITs or real estate companies. Investments in real estate are, inter alia, subject to the following risks: Return riskRead More