It is a widely accepted theory that people of young age have a good chance over investment. One big reason for that is that they will not have any big responsibilities at their young age and investing and taking risks can be easier at a very young age. Usually, investments come with three categories namely high risk, medium risk, and low risk. For people who have a family and lots of dependencies on the source of income they get, low risk and medium-risk investments would be the best option. For people who are very young and especially if they are not the sole earning member of the family then it is the perfect timing for high risks.
How to evaluate risk in investment?
This is a tricky thing. Any investment can have both its advantages as well as disadvantages. The risk factors can be predicted only to a certain extent. Some people might say that holding money on a bank account can be perfectly safe. But imagine a situation where tough time starts for the bank and all your money is locked up after bank hits a huge loss in terms of share value. This can be a high-risk situation. But people can be a little safe if the bank is a government bank because there will be a helping hand from other banks or other alternatives to get the bank up and running.
Well, this is something that we can call as low risk or medium risk. But here again, the risk evaluation is purely based on the performance of the bank and how things work out for the bank. But on an ideal world Fixed deposits and holding money as liquid funds and getting a bare minimum interest from the bank is considered to be a low-risk investment. People who are of mid-age with lots of responsibilities in the family usually go for such investment options.
There are other types of investment options for people who are of a young age. The best time to learn about the share market is only a young age. We cannot predict the outcome of the investment there but if we start the investment at a very young age, then we will have lots of time in hand to make mistakes and learn from the mistakes. I started my investment in share markets during my early stages of the job. I started it as a long term investment but I did lots of mistakes and lost so much money in day trade. After all those mistakes I'm currently staying invested in some of the stocks and waiting for my portfolio to grow.
I talked about different types of risks associated with investments but even if you are someone young and have full freedom to play around with the money that you have, calculating the risks is very important. We might look like an idiot if end up with loss all the time even if we have full freedom to be at loss. It may not look bad right but later after a few years when you are trying to evaluate yourselves, you might feel that you could have done certain things better. It is always wise to calculate the risk and invest accordingly.
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