How to Minimize Investment Risks Without Sacrificing Returns?

At Scramble, we understand that investing can be a stressful and challenging experience, especially when it comes to the possibility of losing money. We get a lot of questions from our clients who are concerned about the risks involved in investing on a daily basis. The fear of losing money can cause investors to miss out on investment gains and result in missed opportunities to grow.

Let's take a look at three strategies that can help you reduce the chances of losing money when you invest.
 

1. Thorough Analysis

Always do your due diligence before investing, as you are responsible for your finances. Research provides insight into how a company is likely to perform in the future. Blindly following the recommendations of others increases the risk of losing money.
 

2. Asset Allocation

One of the asset allocation strategies is to invest in a combination of asset classes that are inversely correlated. For example, equities and gold are inversely correlated, meaning that when one asset class outperforms, the other underperforms.

3. Portfolio Diversification

Asset allocation and portfolio diversification are two closely related concepts. Portfolio diversification involves selecting a range of investments within each asset class to reduce investment risk. Diversifying across asset classes can also reduce the impact of significant market fluctuations on your portfolio. Small-cap companies fall in price faster than large-cap companies during a market crash.

How We Manage Risks At Scramble

- Short-term loans that greatly reduce the risk of failure. The loan period is 6 months with a target annual return of 12%. The senior loans are triple secured with upfront fee payment, co-founder team, and first loss capital guarantees.
- Batches. You invest in a batch of 8-10 businesses every month, rather than in a single business.
- No equity. You lend money instead of purchasing company shares.
- Monthly repayments that help to decrease the debt base gradually. The businesses start to pay back the debt from the first month on.

You should always keep in mind that investing your money involves some risk. However, you can minimize risks and maximize returns by taking a prudent approach and implementing sound investment strategies.