Investing in Vietnam – Risks and potential rewards
Investing in Vietnamese stocks may sound like a great idea to any investors who is willing to take on some risks in order to potentially earn greater returns. Read carefully the previous sentence though. A really important element of it is the word risk.
Risk is a term in accounting and finance used to describe the uncertainty that a future event with a favorable outcome will occur. In other words, risk is the probability that an investment will not perform as expected and the investor will lose the money invested in the project.
As we always like to remind our prospective clients at Anh Thomas Investment, risks and rewards always come hand in hand and investing in stocks is a risky adventure. In other words, investments that have the potential to return a lot are generally risky investments while safer investments typically do not return much. Risk is a natural part of investing and there is no way to completely avoid it even though you can manage to reduce it considerably by taking the right decisions. Investors need to find their comfort level and build their portfolios and expectations accordingly. When you start investing in stocks regardless of the country these stocks are based in, you need to fully understand the risks that you are taking. This is also our job to advise you in order to make sure that you avoid making a big mistake with your finances. We already had some prospective clients who wanted to invest the majority of their net worth in Vietnamese stocks. In this case, not only should we make sure that these investors understand what the worst scenario could be but we believe that we should also go further and try our best to convince them to change their plan. We will never advise anyone to invest most of their net worth in Vietnamese stocks. However, it is true that some more advanced investors could do so without any problem. This is all about understanding what you are doing and making sure that you would still be ok if the worst would be happening. Let’s face it, no one like risk. All of us would love to be able to find risk-free investments with high returns. Unfortunately and this may well be the most important thing to understand in the financial world, these types of investments simply do not exist.