RESUME APPLICATION PAY PREMIUM
Fund Performance

Fund Performance

Knowledge Center

Knowledge Center

About Us

About Us

Tools and Calculators

Tools & Calculators

Quick links

Mobile (Download app)
  • Webpages
  • Documents
  • HDFC Life ClassicAssure PlusInvestment
  • HDFC Life ClassicAssure PlusInvestment
  • HDFC Life ClassicAssure PlusInvestment

For NRI Customers

(To Buy a Policy)

(If you're our existing customer)

For Online Policy Purchase

(New and Ongoing Applications)

Branch Locator

For Existing Customers

(Issued Policy)

Fund Performance Check

RESUME APPLICATION PAY PREMIUM

What do you want to do?

Quick links

Mobile (Download app)

Download HDFC Life App

Buy plans, track your policy, make renewal payments & monitor fund performance with HDFC Life App, Download Now!

Apple Logo Go to Google Play Store

What are Investment Risks? - Complete Details

down-arrow
January 24, 2019

Table of Content

 

Investment is one of the most important and beneficial steps that one takes for capital growth and financial stability in times of expenditure. Regardless of having any financial goal in the near future or any long term specific plan, money investment in India is something that must be done essentially keeping in mind the relevant factors that are likely to affect your decision. Risk-taking is essential, however and the benefits of a decision come with that. However, the key is to take calculated risk and prefer long term, slow and steady growth over the allure of short term, unrealistic gains. In any case, investment comes with certain risks at different levels and as a responsible investor, you must remain mindful of these risks and must know when and how to mitigate them. Some risks generally associated with investment are:

1. Market risk:

This type of risk comes from a general, market-prevailing factor that impacts the entire market. The investment suffers i.e. reduces in its overall value/worth because of this. A market risk can be further classified into:

  • Equity risk:

    Equity risk is the risk of loss happening due to a significant fall in a share’s price.

  • IR (Interest Rate) risk:

    This type of market risk comes with investment in bonds and signifies the fall in the value of a bond with increase in interest rates.

  • Currency risk:

    Currency risk is a type of market risk that affects foreign investment holders. This risk signifies the risk of a monetary loss due to a movement in exchange rates.

2. Liquidity risk:

If a person is unable to sell her/his investment profitably i.e. the risk of having to sell an investment at a loss.

3. Credit risk:

This is a type of risk that covers bonds and bond ratings. This is the risk of loss if the government entity or the company (that issued the bond) is unable to pay the interest due to financial difficulties or significant losses. Credit rating of bond is an indicator of the credit risk associated with that particular bond.

4. Concentration risk:

The risk of loss because your money is concentrated in 1 investment or type of investment. When you diversify your investments, you spread the risk over different types of investments, industries and geographic locations.

5. Reinvestment risk:

The risk of loss from reinvesting principal or income at a lower interest rate. Suppose you buy a bond paying 5%. Reinvestment risk will affect you if interest rates drop and you have to reinvest the regular interest payments at 4%. Reinvestment risk will also apply if the bond matures and you have to reinvest the principal at less than 5%. Reinvestment risk will not apply if you intend to spend the regular interest payments or the principal at maturity.

6. Inflation risk:

The risk of a loss in your purchasing power because the value of your investments does not keep up with inflation. Inflation erodes the purchasing power of money over time – the same amount of money will buy fewer goods and services. Inflation risk is particularly relevant if you own cash or debt investments like bonds. 

HDFC Life offers several beneficial savings and investment plans that ensure your financial stability and serve to protect your finances from any contingency, at all times.

Similar Articles

 

More About Investment

Term Plan Articles Term Plan Articles

Investment Articles Investment Articles

Savings Articles Savings Articles

Life Insurance Articles Life Insurance Articles

Tax Articles Tax Articles

Retirement Articles Retirement Articles

ULIP Articles ULIP Articles

Health Plans Articles Health Plans Articles

Child Plans Articles Child Plans Articles

Popular Calculators Popular Calculators

Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

LinkedIn profile
Author Profile Written By:
Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

LinkedIn profile
Reviewed By Reviewed By:

Here's all you should know about life insurance.

We help you to make informed insurance decisions for a lifetime.

Who Should Know Your Financial Secrets? Here’s Why It Matters!

Who Should Know Your Financial Secrets? Here’s Why It Matters!

Know who in your family should be aware of your financial secrets. Understand why sharing financial information is crucial for securing your family's future.

How Rising Interest Rates Impact Your Investments—and What You Should Do About It

Preserving Your Investment: How New Tax Rules Affect Real Estate Sales Before 2024

Financial Freedom for Women Entrepreneurs: Unlocking Success with the 50-30-20 Strategy

Learn financial freedom for women entrepreneurs with the 50-30-20 strategy. Discover expert tips for balancing dreams, responsibilities, and achieving long-term growth.

Financial Freedom for Women Entrepreneurs: Unlocking Success with the 50-30-20 Strategy
Term Insurance that Cover Multiple Needs are in Demand Previous
Infrastructure Investment – Building a New India Next
HDFC life
HDFC life

HDFC Life

Reviewed by Life Insurance Experts

HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER

We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.

Popular Search

Popular Searches