Читать книгу Investing in Gold & Silver For Dummies - Paul Mladjenovic, Paul Mladjenovic, Ted Sudol - Страница 40

IN THIS CHAPTER

Defining types of investment risks

Lowering your investment risk

Balancing risk against return

The saying goes “no guts, no glory,” and in the world of money and finance, the equivalent is “no risk, no really cool gains.” Risk is part of the world of building and maintaining wealth and seeking financial security. So risk is something you should be aware of so you can minimize your exposure to it while you try to maximize your gains (and income).

In my financial seminars, I spend a lot of time talking about risk because it obviously needs to be dealt with but also because it’s very entwined in the deepest desires of most investors — increasing return. It goes without saying (so I’ll write it down) that the age-old equation in the world of investing is risk versus return. This equation states that if you want a greater return on your investment, you have to tolerate greater risk. If you don’t want greater risk, you have to tolerate a lower rate of return.

The world is full of pitfalls, and precious metals are no different, but keep in mind that precious metals can excel when your other investments don’t. Precious metals guard or hedge against risks that can hurt conventional stocks, bonds, or other fixed-rate vehicles.

Here are some of the risks against which precious metals excel:

 Purchasing power risk: As inflation rears its ugly head, this results in higher prices.

 Currency crisis: As nations increase their money supply, the long-term result is usually a crisis or even collapse of the currency.

 Geopolitical risk: This can range from war to terrorism to international strife.

 Systemic financial risks: This is when a crisis occurs due to problems with vehicles such as derivatives.

 Counterparty risk: Gold and silver, for example, don’t have counterparty risk, unlike most “paper assets” (such as stocks, bonds, and currencies). I cover this very important point in depth in Chapter 2.

In this chapter, you find out about types of investment risks in the world of precious metals, discover how to minimize your risk when you invest in gold and silver, and get tips on balancing risk versus return.