WAYS TO MINIMIZE OR REDUCE INVESTMENT

RISK
 OBJECTIVE
PRESENTATION TITLE

AtSthe end of this lesson,

learners will be able to….

1. Identify the type of risk

experienced by different
investors;
2. Measure the risk of
investing;
3. Solve problems in relation
to investments; and
4. List ways to minimize
investment risks.
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PRESENTATION TITLE
 INTRODUCTION
All investments involve some degree of risk. In
finance, risk refers to the degree of uncertainty
and/or potential financial loss inherent in an
investment decision.

As investment risk rise, investors seek higher

returns to compensate themselves for taking such
risks.

How readily investors can get their money when

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they need it? How fast their money will grow?
How safe will their money will be?
 QUARTERLY PERFORMANCE
PRESNTATION TITLE

2.0
Q1 2.4
4.3

2.0
Q2 4.4
2.5

3.0
Q3 1.8
3.5

5.0
Q4 2.8
4.5

- 1.0 2.0 3.0 4.0 5.0 6.0

5 Series 1 Series 2 Series 3

 DISCUSSION
As an investor, you will encounter many different kinds of risk that may
affect your investments.
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 8. Longevity risk – outliving the savings or investment particularly
pertain to
retired or nearing retirement individuals.

9. Foreign investment risk – risk in investing foreign countries,

falling of GDP,
high inflation or civil unrest, the investment
will
lose money.

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MANAGING RISKS:

A. Diversification – spreading investment into various assets

B. Asset allocation – short-term and long-terms

C. Investing consistently – investing small amounts at a

regular interval.

D. Investing for the long term – long term investments

provide higher
return than short term investment.
 MANAGING RISKS:

A. Diversification – spreading investment into

various assets
B. Asset allocation – short-term and long-terms
C. Investing consistently – investing small amounts at
a
regular interval.
D. Investing for the long term – long term
investments
provide higher return
than short term
investment.
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 Tactics to ascertain risk:

 Standard deviation – measure the dispersion of data from its

expected value. It
is used in making an investment decision to
measure the
amount of historical volatility associated with an
investment relative to of return.

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 To find standard deviation:

1. Add up the rates of return for the period you want to measure
2. Divide by the total number of rate data points to find the average return.
3. Take each individual data point and
4. Subtract your average to find the difference between reality and the
average.
5. Square each of these numbers and
6. Then add them up.
7. Divide the resulting sum by the total number of data points less one -- if you
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12 data points, you divide by 11.
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 THANK YOU

MIRJAM NILSSON​
MIRJAM@CONTOSO.COM | WWW.CONTOSO.COM