After knowing the three type of investment risks, let’s continue our discussion about the next four type investments risks.
Liquidity Risk
Liquidity risk is the risk that arises from the difficulty of providing cash within a certain period. The liquidity risk is usually more likely to occur in emerging markets or small volumes.
This type of risk has to do with the acceleration of securities issued by companies that can be traded in the secondary market.
Risk of Foreign Exchange or Currency Exchange Rates
Foreign exchange risk is a risk caused by changes in foreign exchange rates on the market that are no longer in line with expectations, especially when converted to domestic currencies.
This type of risk is related to a fluctuation in the exchange rate of the rupiah against other countries’ currencies. In general, this type of risk is also referred to as currency risk or the exchange rate risk.
Country Risk
According to Investopedia, country risk refers to the uncertainty associated with investing in a particular countrythat could lead to losses for investors. This risk is based on the country’s political conditions. From this risk, there is also a connection with changes in statutory provisions that make income decline.
It is not even possible if the investments that have been planted eventually just disappear or lose money. Therefore, if if you want to invest abroad, it is better to look at the political conditions of the country. If political conditions are good, it will also have a positive impact on the investment world.
Reinvestment Risk
This risk is a risk that occurs on income from a financial asset that requires the company to re-invest. Thus, when you want to re-invest, the company must understand what re-investing is and how to be able to manage or manage this investment risk.
From now on, you already understand how the risk of investing can affect investment profits or losses. Every investment has a risk of whether the risk is big or small. Meanwhile, when these risks have major implications for the value of your investment, then you should do a variety of tips on managing investment risk.
Read more: Getting Rich through Investment Portfolio