Managing investment risks does not mean avoiding them altogether – after investing there are ways to reduce your investment risks. Industry experts say having measured risks has the prospects of higher returns and helps in wealth creation.

Hence, riskier investment options such as equity trading, equity mutual funds, derivatives trading, forex, commodity, etc. can also be looked at with risk management strategies to mitigate losses.

Split and Balance your investments
To start with, allocate your investments across a mix of asset classes. Opt for asset classes with different levels of risk-return. Doing this might not guarantee a profit every time, but it will reduce the chances of wealth erosion.

For instance, equity has comparatively the highest level of risk over the short term but is reputed to give higher returns in the long run. Less severe investment options include safer bonds, but in the long term, returns are lower and not inflation safe. Experts say one should try to balance one’s high-risk investments with medium-risk and low-risk options.

Divide your asset allocation
Allocate your investments across asset classes, and make sure they are in line with your goals and risk appetite. Experts say one should not focus their investment on one company or sector, instead, one should look at large-, mid-, and small-cap stocks across high-growth and stable sectors.

What is your risk threshold?
This is to determine the extent of the risk you are willing to take on your investments depending on your age, knowledge, and experience. For instance, if you are young with few responsibilities, you can take high risks, whereas later as your goals change with child education, healthcare, retirement, you should reconsider taking aggressive risks. Hence, depending on your risk appetite you should approach and choose investment products.

Research your investments
To be a successful investor, take risks but calculated risks. For instance, while evaluating a stock for investment, experts say look at its price movement and the financial health of the company. Review the company’s financials and do a trend analysis of its stock price movements. Additionally, you can also take reliable financial advice and guidance from credible financial experts.

Additionally, to make sure your investments are on track and review monitor your portfolio periodically. Experts say the SIP route should be used for trading in equity or buying equity funds to mitigate the volatility and fluctuations in the financial market.

Track the performance and review your portfolio at regular intervals to ensure that the returns are in line with your financial goals. If some funds seem not to be performing well, experts say, not to hesitate to rebalance and shift such investments to better-performing investment products.