ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

The Risks You Take in Investing Your Money

Updated on August 31, 2014

What are people risking in their investments?

With investing, if you take barely any chance at all, then you can run the risk of coming out short in the end. People that have their investments in the safest things like CDs, bank accounts and Treasury bills, have a smaller possibility for any significant reward. This is fine with many people actually, and you can't fault them for it as it is understandable. 

Another risk is that you may outlive your assets, and as the percentage of inflation increases, your investments and their growth may not keep up. Thus, you fall behind again.

On the other hand, if you are into speculative investments, you risk losing your principal altogether! That would be awful, but we see it happen. The more you seem to understand the different approaches and strategies, the more likely a person is likely to take a more moderate approach to their investing. These people are willing to balance the potential risks to get the kind of results they are wanting. When this is the case, some will opt to invest smaller amounts into the more speculative investments, while shielding some of their other assets. They also like to keep a fair amount of liquidity to meet any other needs that come up with cash, if need be.



With different types of investments, like corporate and municipal bonds, you run some risks such as if the issuer will default and not pay the principal. With stocks, you risk losing your principal if the shares should decline in their value. Or you lose principal if the company goes bankrupt, which we are seeing so often lately. There are some derivative investments out there that you can lose more than you ever invested into them. So again, doing one's homework can definitely save you money.


It is wise to take volatility into account and the effect that is made when the market conditions change. There are sudden swings in value high to low to high again, and the opposite can be seen as well. The more volatile an investment is, the more you can make in profits of course. You can invest a certain amount, but sell it when it swings and make some money. The spread can be large, and you can cash in on that. The inevitable downside is always there as well, and the price can drop in a big way and you can be stuck.

Be careful that you don't risk buying lower quality or unfamiliar investments that are promising big returns necessarily. Many investors seek out investments with the similar yields that they were able to get during better times. You need to know that these things can result in higher returns but also higher losses as well.

If you sell when prices drop as some do, you might not have the opportunity to take advantage of the situation when the prices go back up.

6 Major Risk Factors in Investing

Risk Vs. Rewards in Investing - Poll

Do you prefer to be more "safe" when investing, or are you a risk taker?

See results


    0 of 8192 characters used
    Post Comment

    • oceansnsunsets profile imageAUTHOR


      7 years ago from The Midwest, USA

      I appreciate that Arthur, thank you!

    • arthurchappell profile image


      7 years ago from Manchester, England

      invaluble advice in these troubled financial times

    • oceansnsunsets profile imageAUTHOR


      7 years ago from The Midwest, USA

      Yes, the tax man always comes! Thanks for your comment BJ.

    • BJBenson profile image


      7 years ago from USA

      Great hub to start the year with. Tax man coming.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)