How to reduce risks when investing?

One of the most important aspects of successful investing is risk management. One of the most effective methods is diversification, i.e. the allocation of investments between different asset classes. This helps to reduce dependence on a single source of income and reduce the impact of possible losses in one category on the entire portfolio.

Another important aspect is a clear understanding of your investment horizon and financial goals. The longer you plan to hold assets, the more opportunities you have to smooth out market fluctuations. Short-term investments are often accompanied by high risks, while long-term investments usually show more stable returns.

Emotional decisions are another source of risk. It is important not to panic in times of market fluctuations and to stick to a pre-determined plan. Regularly reviewing your portfolio and strategy, as well as consulting with professionals, will help you make timely course corrections and minimise risks.