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How to manage risk in your investment portfolio?

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How to manage risk in your investment portfolio?
November 08, 2016

Table of Content

 

A lot of investors take financial decisions with little or no thought towards whether the investment will help them achieve their investment objectives or is in harmony with their risk appetite.

Risk is the detail that attracts least attention from investors. This is even more ironic when we consider that misplaced risky investment bets are often the cause behind the downfall of many a portfolio.

  • What is risk?

    fPut simply, risk is the amount of money an investor can afford to lose in his quest to clock a certain return on investment. If the investor can withstand significant loss on his original investment this risk appetite is high. Another trait of such an investor is the ability to endure sharp fluctuations in his portfolio. Conversely, if the investor cannot withstand sharp fluctuation in his portfolio or cannot afford to lose money on his original investment, his risk appetite is moderate to low.

  • Why risk must be considered while investing?

    While evaluating an investment it is important to gauge the risk along with the probable return as risk and return are two sides of the same coin.

  • How to manage risk?

    Your risk appetite must dictate your choice of investments. If you have a high risk appetite then high risk investments like a unit-linked plan with high equity exposure could be ideal for you. On the other hand an investor with low to medium risk appetite can consider a unit-linked plan(ULIP) with lower equity component or opt for an endowment plan for the relatively low risk.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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