In this article I discuss three things about risk:
- What it is
- Its conditions for the short/long term
- Pro & cons of risk
Before talking about “risk” we must first define it.
Risk is the potential consequence(s) that comes after one has taken a certain decision at a certain time. This decision must be taken upon solid research & due diligence over whatever one desires to take a decision on.
As for the conditions for taking on risk, one must take into account three things: 1) knowledge, 2) experience, 3) the leeway to absorb damages.
This brings me to the pros & cons of taking a decision on anything that involves risk, big or small.
Pros
- The higher the risk the higher the return
- Gaining experience from learning firsthand about the field
- Raising personal awareness
- Learning how to manage gains &/or losses
Cons
- Stress
- Potential losses
- Not wanting to take on other risks elsewhere
These cons could be turned into pros if managed well.
Bottomline
The more risk there is, the more potential gains, too. Whoever wishes to take on risk must do so carefully by doing their due diligence & managing it well.
* This article was not written by Thndr and is not considered investment advice. You should do your own research before making investment decisions.
