Investing – Risk Management
If you want to describe the meaning of risk management in one sentence, you could say «Risk management protects the portfolio from major impairments.».
In theory, risk is defined as volatility (range of fluctuation). Volatility is calculated from the amount of negative and positive price movements. But positive price movements are not a disadvantage for us, they are an advantage. Risk is and remains an individual assessment.
What are the risks? How can you protect yourself from risks?
Stock market risks
There are many risks on the stock market. You can protect yourself well against some risks and less well against others.
The graphic lists six risks.
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Potential risk
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Market risk
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Liquidity risk
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Credit risk
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Concentration risk
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Foreign exchange risk
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Inflation risk
How can you protect yourself from risks?
There are several ways to protect yourself from risk.
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Diversification in asset classes
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Diversification in sectors and industries
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Diversification in geographical regions
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Diversification with different investment strategies
This approach not only brings diversification, but also solves the problem of timing.
This approach is one of the most important points for the success of our ETF Core Investment Strategy. More about this is described here.
.. More .. ETF Core Investment Strategy - How it works. -
Analysis of the economic outlook for individual economic areas
If you want more about this topic, look at our Research.
.. More .. Research -
Money management
