Risk management analysis on a profit and loss basis

Image source

This type of analysis is very important when our finances are not clear, reason why if we do not have very clear the numbers involved then we must make the calculation of profits and losses and in this way be able to manage the associated risk.

Risk management in investments allows us to have a broader vision in investments since with investments we can obtain additional income, if we take into account that investment is a financial matter, then it is normal to think that if we have a capital and we want to produce it, we simply invest so that the money works for us, but let's see what other aspects are involved.

The diversity in the investment world makes people invest with multiple purposes, however the financial objectives remain the same although it may not seem so, the other important thing to take into consideration is that due to this diversity of purposes but that follow the same financial objectives, new objectives are also incorporated that walk hand in hand with the existing ones and become compatible with the financial vision managed, some examples may be when it is intended to promote innovation in the corporate world, promote libertarian utopia by joining monetary systems that are separate from the state domain as is the case of cryptocurrencies. Likewise, everyone needs financial freedom that depends on proper risk management.

However when we wish to promote social events we lose the sense of profit, since when pursuing these political and social causes, in many cases, investors compromise financial objectives for their ideals, thus promoting a model that cannot be viable for everyone.

But if our investment ideas are to generate profits without putting the ideals on the grill, then without realizing we are already minimizing the risks, one way to maximize our profits is to think intelligently and not put all our capital in investments that are volatile, it is also important to have patience if we invest in volatile assets.

The important thing is that each person must adapt his philosophy to evaluate the risks in a profit-loss balance, the possibilities of winning and losing are latent, the important thing is to make an analysis based on our interests and what we really pursue as potential investors.