Kevin Bratch – How to understand various categories of Investment Risks as an Investor

Kevin Bratch has always noticed that many people invest in stock without due diligence.  Just because a certain investment promises a tidy sum in regards to investing in it does not guarantee that you will reap big from it. Like any other investment, there are uncertainties along the way that any investor must factor in before committing their money.

These are known as risks, which any investor worth their salt must be prepared for. Hence, preparing adequately in advance helps cushion them from any loss that might occur to their investments. This is because they are aware of the risks involved and can easily find ways of handling the situation in case it occurs.

Therefore, according to Kevin Bratch, a seasoned financial advisor and investor, there are several risks that any investor in the stock market must take into account.

The first one is known as market risk. A situation where the value of investment might decline as a result of prevailing economic conditions or any other occurrences that tend to affect the market negatively.  Thus, in this category, such risks include equity risk, which mostly applies to shares, where the value might increase or drop, rate of interest mostly in bonds, where it might fluctuate leading to a drop or increase in its market value. Currency risk involves foreign investments in terms of fluctuations in the exchange rate.

Secondly, risk in liquidity is an unfortunate situation where investors are not able to offload their investments at a given price to recover their money, hence, they may end up selling them at a lower price than what was anticipated.

The third main category of risk is known as the concentration risk, which is more associated with loss where investors put all their money in one basket to reap big as opposed to diversification where the risk is easily spread among different types of investment portfolios.

There are very many risks involved and these are just a few of them. And Kevin Bratch is always of the opinion that investors must do their homework well before they invest.