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Investing in stocks means taking risks



Investing in stocks means taking risks and it is without any possible doubt riskier than investing in real estate for instance. (However, your returns over the long term will also be much more superior if you invest in stocks than if you do in real estate) Among the risks associated with investing in stocks, we can mention market risk, inflation risk and liquidity risk. Market risk is the possibility of an investor experiencing losses due to factors that affect the overall performance of the financial markets. Inflation risk is the chance that the cash flows from an investment will not be worth as much in the future because of changes in purchasing power due to inflation. Liquidity risk is the risk that markets become at least temporary illiquid.

Investing in Vietnam is more risky than investing in a developed country.

It should not come as a surprise to anyone that Investing in Vietnamese stocks is much more risky than investing in real estate in a large European city.

A question arises then: Why would you ever consider investing in stocks especially in Vietnam when you know that you take so much risk to do so?

The answer can be as short as one word: RETURNS. Over long periods of time, stock indexes have historically produced total returns in the 10% range. Meanwhile, real estate prices tend to slightly outpace inflation over the long term. This might come as a surprise to some, but real estate prices tend to have years of strong 5-10% growth followed by many years of stable or slightly falling prices.

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