No risk, no profit, basic rule of investment
Almost everyone knows that there is a clear relationship between risk and the amount of profit received.
The riskier the transaction or the higher the leverage, the greater the profit you can expect upon completion.
The best example of this is the negative bank deposit rate in Swiss banks, where you pay money for the fact that your savings will remain safe with the maximum guarantee.
At the same time, trading forex with high leverage allows you to earn tens of thousands of interest per year, but has a huge level of risk.
It is quite difficult to do this; it is not for nothing that investment funds have a large staff, while the average profitability of these funds rarely exceeds 30% per annum.
How to find the golden mean between profit and risk?
Everything here is quite simple and directly depends on the amount of money you have at your disposal.
The easiest way to explain this is with your own example. Ten years ago, I myself preferred Forex trading to other types of investment and trading.
And this is not surprising, because it is difficult to get a tangible profit by investing a couple of thousand dollars, and Forex offers real chances of making money with small funds.
After the amount on deposit began to increase, the desire to take risks disappeared and part of the money migrated to the stock market.
Over time, free funds appeared, with which real estate was purchased and deposits were opened in banks, including in precious metals.
After this, I had some confidence in the future, because now my earnings do not depend only on the success of Forex transactions.
Moreover, if we evaluate the profitability of all investments, a rather interesting picture emerges:
• Funds used in Forex trading account for 4% of all investments - yield 60% of all profits received
• Money invested in deposits, real estate, precious metals and securities are the remaining 96% of funds - while they bring 40% of the total profit received.
That is, it is clearly visible how less profitable low-risk investment options turn out to be. Yes, this is not surprising since if, under a successful combination of circumstances, Forex trading brings more than 300% per annum, and a deposit in my bank gives only 1% profit per year.
Real estate and precious metals are also not rising in price as rapidly as we would like, and dividends on shares are even more difficult.
Based on my own experience, I can draw an unambiguous conclusion - if you don’t have a lot of money, then you definitely have to take risks to make money.
Alternatively, in order not to use the most risky strategies, you can increase the deposit at the expense of investors’ funds; to do this, you need to become a manager , after which you will have the opportunity to earn money from investors’ money with less risk.
It is clear that everyone has their own path, and the proposed scheme will not work for everyone. But if you, like me, are a fairly frugal person and plan everything ahead, you will definitely succeed