People should have a sense of risk. Before investing in a fund, ask yourself "how much loss is allowed". This is very important. To understand your risk tolerance, that is, the loss will not affect your life, and depression will not affect your health. Before buying a fund, you should make a careful risk assessment to determine whether you are active, balanced, stable or conservative, so as to choose a fund variety.
2. Systematic risk and non-systematic risk
Systematic risk is caused by the uncertainty of basic economic factors, so the identification of systematic risk is to judge the macroeconomic situation of the country in a certain period.
Systematic risk refers to the risk that has a general adverse impact on the whole stock market or most stocks, and it is caused by factors outside the company that the company cannot predict and control. Usually manifested as global or regional oil panic, serious recession or depression of the national economy, serious crisis of the world economy or a country's economy, persistent high inflation, laws and regulations promulgated by the state that are not conducive to the macro-control of the company,
The central bank adjusted interest rates, catastrophic natural disasters, etc. These factors occur alone or in combination, leading to price fluctuations of all securities and commodities, involving a wide range. People can't take some targeted measures to avoid or use them in advance, and even if they diversify their investments, they can't change or reduce the risks at all.
In this sense, systemic risk is also called overall risk or macro risk. The consequences of overall risk are universal, and its main feature is that all stocks have fallen, and it is impossible to preserve their value by buying other stocks. In this case, investors will suffer huge losses.
Non-systematic risk refers to the unfavorable factors that cause losses to some stocks due to certain factors, including the delisting risk and liquidity of listed companies.
Insurance, financial risk, credit risk, management risk, etc. For example, the management ability of listed companies has declined, product output and quality have declined, market share has decreased, technical equipment and technology have aged, raw material prices have risen, and unpredictable natural and man-made disasters have occurred in individual listed companies, resulting in the decline of some or several stock prices. The main feature of this risk is that it has a local impact on some stocks in the stock market, and investors can make up for the losses by buying other stocks instead. The possibility that the stock company's own reasons lead to the decline of securities prices only exists in a relatively independent range, or in individual industries, and comes from micro-factors within the enterprise. This kind of risk comes from the unique events of a certain securities or an industry, such as bankruptcy, default, etc., and has no systematic connection with the whole securities market. This is an accidental risk or residual risk other than systematic risk in the total investment risk.
Systematic risk cannot be eliminated, but non-systematic risk can be solved by diversifying investment, which can be dispersed or transferred by formulating securities portfolio.