7 Tips for Managing Risk in Investments, Understand So You Don't Lose Money!

Investment illustration (Photo: Pixabay/Tumisu)

YOGYAKARTA – Investment is the activity of placing money to make a profit. So, every investment activity has risks that must be managed well so that investors can gain consistent profits. It's not an investment if the profit you get is only one time. The following are tips for managing risk in investment that investors or capital investors need to know.

Tips for Managing Investment Risk

Summarized from various sources, the following are ways to manage investment risk that can be done to minimize losses and obtain consistent profits from investment activities:

1. Diversify assets into various investment instruments

The first tip for managing investment risk is to diversify assets into various investment instruments such as shares, bonds, mutual funds, property and various other investment instruments.

Please note, asset diversification is a strategy for mixing a portfolio by placing funds in various sectors that can provide balanced returns. By diversifying, investors can reduce the risk of losing all capital if one investment instrument experiences a loss.

For example, an investor could buy shares in the banking sector and then buy bonds at the same time. When the banking sector is down, and the bond sector is rallying or bullish, investment value will continue to be boosted because it is helped by the performance of the bond sector.

2. Conduct thorough research

Before placing capital in an investment instrument, you are advised to carry out thorough research in order to minimize risks.

Understand in depth the investment instruments chosen, market conditions, industry trends, and other factors that can influence the value of your investment.

3. Choose long-term investments

Quoted from the OJK's Ilmuiuangmu page, long-term investments are investments that require a long time, usually more than 5 years.

Long-term investments are considered more stable and have the potential to bring in larger and more consistent profits.

When you invest with long-term goals, you can reduce the risk of short-term price fluctuations.

Additionally, long-term investing also allows you to overcome potential losses and take advantage of long-term profits from the assets purchased.

4. Choose investment instruments according to your risk profile

Investment risk is something that cannot be avoided, but can be minimized. Therefore, you need to know every investment risk that you have to face.

In this regard, you need to adjust the investment instrument or product to your risk profile. Apart from that, you also need to adjust to your financial conditions and financial goals.

5. Follow market developments

The next tip for managing investment risk is to find out the latest information about the financial markets. Changes in market conditions can have an impact on the value of your investment.

6. Set risk tolerance limits

Before investing, it is important to clearly understand your investment objectives and the extent to which you are willing to take risks.

By setting acceptable risk limits before investing, you can determine an asset allocation that suits your risk profile.

Don't be influenced by market sentiment or emotional decisions, because this can increase investment risk. Additionally, consider using risk management instruments such as stop-loss orders or protection options.

7. Consult with a financial advisor

If you are having difficulty managing your investments or reducing risk, consider consulting an experienced financial advisor. They will provide more specific insights and strategies according to your goals and needs.

This is information about tips for managing risk in investing. Hopefully this article can broaden the insight of loyal VOI.ID readers.