Types Of Risks That Can Be Handled With The Services Offered By Investment Management Company

 Everyone assumes a certain level of risk when it comes to investing. This is due to market movements, the nature of financial instruments, the external environment in which the economy is developing, and many other aspects that can affect investments in the financial markets.

This is the reason why it is advisable to carry out risk management with an investment management company, which determines the pros and cons of a specific investment before making it. Apart from being a good investment broker, the experts from the financial intermediary will take into account the importance of risk management in investments and help you in many ways.

Role of financial intermediary investments:

First of all, it is necessary to emphasize that each investor admits a different level of risk in their investments according to their own profile. In this sense, we can identify three main investor profiles:

 First of all, it is about the conservative profile that assumes a minimum risk in its investments. In addition, security and the possibility of knowing the exact profitability of the investments are important. In other words, they prefer not to take risks and invest only in fixed income.

 Second, a moderate profile. These investors can afford a little more risk, but without going over the limit. They prefer to keep most of their capital in fixed-income instruments, but they bet on earning a little more by putting a certain percentage, which varies from one investor to another, in equity instruments of very liquid companies to obtain higher returns. They do it with great caution. They are the ones who are most concerned with analyzing risk management in their investments.

 Thirdly, we have an aggressive profile that seeks the highest return by assuming more risk, since it places a large part of its investment capital in equity instruments. In general, they are young, single people with high incomes from different activities. In the event that they care about managing the risk of their investments, they pay for advice on this.

So financial intermediary will depend on your profile as an investor and the risk you are willing to accept.

Types of financial risks which you could avoid with the investment management company:

 Market risk – It refers to the risk type which directly affects, regardless of the companies in which it is invested. For example, they are events that have caused times of crisis for many countries. Also, market risk can be referred to as “volatility”, which means the speed and magnitude of changes in market prices.

 Interest rate risk – It is the risk associated with movements against interest rates.

 Exchange risk - This risk is associated with changes in the value of currencies.

 Credit risk - In this case, it is about leverage, which consists of investing money that you do not have.

 Liquidity risk- It refers to the risk that the company that sold the shares, for example, does not have enough liquidity to pay the investor.

 Operational risk - It is the possibility of suffering financial losses due to failures, market movements, trends, processes, lack of personnel, etc.