invest@net

 

Issue No.

Part1of

Back to index

This article is reproduced with permission from
Normandy Advisory Services Sdn. Bhd (Licensed Investment Advisor)
15th Floor Menara Multi-Purpose, No 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur
Tel : 03 - 469 5560 Fax : 03 - 294 5561


This article is copyright and no part of it may be reproduced in any form without the prior consent of Normandy Advisory Services
















Almost all investing involves some degree of risk. Investment is a commitment of money with the expectation that additional money will be generated in return. It requires some sacrifice now in return for a future uncertain benefit.

Analysts define risk as variability of return or in other words, it is the possibility that the actual return from an investment will differ from the expected return at the time the investor purchases the investment.

The wider the distribution of returns (the greater difference between actual and expected returns), the riskier the investment.

Today's investment environment offers a wide range of choices with different scales of risk but generally, investors are categorized under two key approaches - passive or active.

An investor usually obtains higher returns when his dominant assets are invested in investments that carry more risks (active approach). In particular, investors in the local speculative Second Board quite often generate more attractive returns. In other words, active investors adopt a more vigorous style in selecting their investment types.

Active investing is often more difficult and time consuming but the payoff is usually high. Active investors frequently in and out of the market as the market changes and are required to monitor the performance of their investment portfolios more closely.

Lower risks investments generally offer investors lower rates of return. A less aggressive investor normally delivers fewer returns but will enjoy stable income flows over a longer time frame (passive approach).

NEXT PAGE