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For anyone stepping into the world of investment, one truth quickly becomes clear: every investment carries risk. The challenge is not to avoid risk altogether but to understand it, manage it, and match it with your financial goals. But keep in mind that in managing risk you are making a determination as to what you have the “belly” for as we say in local parlance. At the same time, having the right sources of advice can make the difference between confident investing and costly mistakes. The nature of risk in investment Can I be real with you? I got into an investment once and others were also involved. One young man put out $9000.00 of his money. I did not use my money. I let the advisor put out on my behalf to show proof of his confidence in the venture. That way he took the risk and sure enough it went “belly up”. That young had to “swallow it” as they say. It was not easy but he was made fully aware of the risk he was taking. Another time I did take a risk for a business venture I went into. Unfortunately my business partner who was the financial backer did not keep to his word. Being my first risky business deal I was very naïve in basing the agreement on word of mouth. I learnt a lesson on the use of contracts and how to handle debtors. In general there are risks we take everyday. Some we expect and some we don’t, they hit us like “curve balls”. Investing is essentially about trading the certainty -what you have today- for potential gain tomorrow. The greater the chance of higher returns, the more risk is involved. Recognising this balance is key for every investor. Here are some types of risks to expect with investments: 1. Market risk This is the possibility of losing money because of overall market changes—such as a stock market downturn or a dip in property values. 2. Inflation risk If your money grows slower than the rate of inflation, its purchasing power decreases. 3. Liquidity risk Some investments, like property or long-term bonds, are not easy to sell quickly. This can be a problem if you suddenly need cash. 4. Credit risk This applies when you invest in bonds or lend money. If the issuer defaults, you may not get your money back. 5. Personal risk tolerance-what you have “belly” for Beyond financial risks, there’s the emotional side. Some people cannot sleep at night if their investments fluctuate, while others can handle volatility in exchange for growth. Knowing your personal comfort level is as important as understanding the numbers. Balancing risk and reward The secret to managing risk lies in diversification—spreading investments across different asset classes. A balanced mix of savings, bonds, and stocks can help protect your portfolio. Younger investors can usually afford to take more risks, since they have time to recover from market downturns, while older investors may prefer safer, lower-risk options. It’s also wise to invest with a time horizon in mind. Money needed in the short term—such as for tuition or a home deposit—should be kept in safer, more liquid options. Longer-term funds, like retirement savings, can be invested in higher-risk, growth-oriented assets. Who to turn to for Advice Navigating investment risks alone can be overwhelming. Fortunately, there are reliable sources of advice: 1. Financial advisers and planners Certified professionals can help assess your goals, risk tolerance, and financial situation before recommending investment strategies. Look for advisers with credible qualifications and, ideally, a fee-based structure rather than commission-based, which reduces conflicts of interest. 2. Banks and Credit Unions Many financial institutions offer guidance and products tailored for beginner investors. While not always as personalised as private advisers, they provide accessible, regulated options. 3. Government and regulatory agencies In Trinidad and Tobago, bodies such as the Central Bank and the Trinidad and Tobago Securities and Exchange Commission publish educational resources and alerts about fraudulent schemes. Checking these resources helps ensure your investments are legitimate. 4. Reputable online platforms Educational sites and investment platforms can provide tools for self-directed investors. However, it’s important to distinguish between educational content and unverified online “tips” or hype-driven advice. 5. Mentors and experienced investors Sometimes the most valuable lessons come from trusted family members, colleagues, or mentors who have years of investment experience. While they may not replace professional advice, they can share practical insights. Avoiding bad advice With so much information available, it is easy to fall prey to questionable advice. Be cautious of: • Promises of guaranteed high returns. • Investments you do not fully understand. • Pressure to act quickly without time for research. If something sounds too good to be true, it probably is. Always verify the legitimacy of investment products and advisers before committing money. The bottom line Risk is unavoidable in investment, but it doesn’t have to be frightening. By learning about the types of risks, understanding your own tolerance, and seeking advice from trusted sources, you can make smarter, safer financial decisions. Investing should not be about chasing quick wins but about building steady, long-term security. With the right guidance, young investors can face risks confidently and grow wealth responsibly over time. Five questions to ask before taking investment advice Not all investment advice is created equal. Before committing your money, pause and ask these five questions: 1. Is this adviser qualified? Check for certifications, licences, or membership in recognised financial bodies. 2. How do they get paid? Fee-based advisers are often more transparent than commission-based ones. 3. Do I understand the product? Never invest in something you can’t clearly explain to someone else. 4. What’s the risk level? Make sure the potential losses match your personal comfort and goals. 5. Can I verify this independently? Cross-check advice with trusted sources like regulators, banks, or official publications. Tip: If an opportunity feels rushed, secretive, or “guaranteed,” walk away.
