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Abstract
Under the investment is understood as embedding, often long-term, in certain sectors of the economy in order to obtain in the future profits. Investment on the project investment can be divided into three types: real investments that involve the direct purchase of capital repair of capital assets or investments in a variety of intangible assets, speculative investments, financial investments, which include originated loans, leasing and investments in securities.
Securities investment risk (stocks and bonds)
Investing in securities is perhaps the most common views of the investment activity. In the securities invest their capital, both private and institutional investors. Most often investors engaged in portfolio investment, which involves working with more than one security, but with a whole collection of them, including the securities of different kinds. It is under the portfolio investment can be achieved the best results: the maximum revenue with minimal risk.
The risks of investing in securities generally divided into non-diversifiable (systematic) and diversifying (not systematic).
The first kind of risk - systematic risks - associated with the macroeconomic situation in the state, and the conjuncture of activity in the financial markets. Simply put, systematic risk can be defined as common risk regardless of which part of the paper bag investor. The main components of non-diversifiable risk are: the risks of changes in legislation, inflation risks, interest rate risks (associated with changes in interest rates); currency risks (associated with changes in foreign exchange rates), political risks.
The second category of risk - non-systematic risks. Such risks associated with a particular type of securities. Here are the main components of the non-systematic risk: temporary risks (related to the possibility of delayed the sale or purchase of securities); selective risks (associated with the possibility of a wrong choice of securities), credit risks (associated with the likelihood that the organization emitting securities will be unable to fulfill its payment obligations); recall risks (associated with the possibility of review by the issuer of the securities), liquidity risks, operational risks.
Precious Metals and Gems Investment Risks (Gold)
As inflation and the risk of sovereign debt is very high in the representation of investors, precious metals have taken a more prominent place in the portfolios of clients. Investing in gold, silver, platinum and palladium, contribute to the diversification of asset allocation plans. We also offer our customers non-standard mechanisms of investing in precious metals, such as direct investments, investments in mining stocks, mutual funds, precious metals and certificated securities.
Investors who are interested to invest part of their portfolio in gold, there are several options. Direct investment can be made by buying physical gold or gold certificates. Exchange-traded funds and futures provide half-lines risks. Gold mines provide indirect risks.
The main risk of investing in gold - is a further aggravation of liquidity. And there should not be given to reinforcing basic fears that tend to act out the main role in the pricing of precious metals (a possible default by Greece and a new recession), because here the gold could not avoid falling in price. Liquidity needs, there could play a much bigger role, which will initiate a cascade reduction of positions in investing in gold and further reduce its quotes to $ 1450-1500 per ounce.
But all the same low interest rates and the stability of the currency market can trigger the growth of quotations of gold - up to $ 2,000 per ounce. The main engines are pulling up the price of gold remains unchanged - the persistence of low interest rates in the U.S. until 2013, is a high probability of default of some European countries and the possible lowering of rates by the ECB. We should not forget about the general fear of the financial stability of the world as a whole.
These factors make CenterBank support demand for gold (especially in emerging economies) and specialized funds that pay money to customers in the physical metal (ETF). In addition, there is a possibility that the ECB will have to include "printing press" to save a number of European banks, which will mean new liquidity and growth of quotations of gold, as it was after the easing of monetary policy in the United States.
The fact that CenterBank buying gold is the main propelling force for the upward trend. Since 2008, significantly reduced sales of precious metal from the Reserve Bank. Now the banks have become net buyers of gold. Thus, they are trying to diversify their own capital in the backdrop of an unstable currency situation.
And here again at the forefront of the Central Bank of developing countries - Mexico, Russia, South Korea and Thailand. During the first half of the year, these countries bought gold at 200 tonnes. This provoked distrust of foreign currencies with an initially small reserve of gold (less than 0.2-7.5%, compared with more than 60% in Central Europe). The demand of the People's Bank of China also supported. The latest figures say that the gold reserves of China is 1,054 tons, that is, the metal has 1.9% of the country's international reserves ($ 3.2 trillion). To achieve the target of 5%, China needs at least to double its stock that will be around ¼ of the total annual demand for the metal on the world.
As a conclusion we can say that you need to invest in gold. And if you have not already, do, there's still time. If you are supporter of speculative investment and does not believe in the end of the financial world, pay attention to the futures and ETF (GLD US). If you are a long-term investor, and have already begun to dig their own financial haven - start to diversify risk and buy the physical metal. Just do not need gold to make a panacea, because it quotes can also rapidly collapse, as is the case with any other tool.
Although the price of gold has risen dramatically in the past year, there is no guarantee that the precious metal will continue to rise in price in the future. Like any commodity, gold is trading under the influence of the current and projected demand. The amendments to the policy of the Central Bank and the monetary and those involving the purchase or sale of precious metal, can affect prices. The strength or weakness of the U.S. dollar relative to other currencies influences as gold is sold. Economy - another factor. If long-term interest rates or inflation differ from expectations, it could potentially help or hurt gold prices. Geopolitics, though unpredictable, but also plays a role.
The most important factors to keep in mind though that wealth, the time, the diversification of the portfolio, the type of account that holds the metal and the willingness to deal with a potential storage and fiscal matters. Gold can play a role in a diversified portfolio, but like any asset, it may not be suitable for all investors.
Real Estate Investment Risk
Real estate investments appear to be relatively safe way to increase capital. It is necessary to know the risks of the real estate market in order to best protect the invested capital. To do this, take a look a closer look at the risks associated with an investment in real estate.
The real estate market is at risk from external sources. This investment risk is associated with the effect of business cycles on the economy. Recently, its effects have been seen in the U.S. market. We watched the collapse of the U.S. economy and, in particular, the decline in real estate. The wide availability of credit has increased the demand for U.S. real estate market. Unfortunately, not all the new homeowners were able to cope with the repayment of loans. There was a wave of bankruptcies of borrowers and sale of housing. The collapse of the real estate market was due to the decline in other sectors of the U.S. economy. The consequences of this situation, we felt in our country. Banks operating in our market, have a limited supply of the loan. As a result of declining demand for real estate in our country offers banking fell. For investors who are looking for a profit on the real estate market was a difficult period. However, after a period of decline is usually observed recovery.
In the long term, the real estate market will experience a significant increase in the cost of housing. Therefore, be aware that the risks associated with cyclic phenomena are inevitable, but they should not distract from the real estate investments for a long period of time.
Other risks in the property market in developing countries from external sources are unstable legal system and the risk of government intervention in the housing market, and changes in land use, and the fact that officials may discourage investment in real estate.
Sources
- McNeil, Alexander J.; Frey, Rüdiger; Embrechts, Paul (2005). Quantitative risk management: concepts, techniques and tools. Princeton University Press. pp. 2–3. ISBN 978-0-691-12255-7.
- Horcher, Karen A. (2005). Essentials of financial risk management. John Wiley and Sons. pp. 1–3. ISBN 978-0-471-70616-8.
- Chong, James; Jennings, William; Phillips, Michael (May 2012). "Five Types of Risk and a Fistful of Dollars: Practical Risk Analysis for Investors". Journal of Financial Service Professionals: 68. Retrieved 28 June 2013.
