The contemporary global investors are increasingly attracted towards Canada because of the Canadian commercializing and connecting to a massive array of the world supply chain. Many business giants and leading trading houses across the world like the most companies from the fortune 500 consider Canada as the paradise of business opportunities and have set up R and D hubs in Canada. If you are a start-up business enterprise or intend to invest in Canada, you need to get acquainted with various business terminologies used in the business transactions, different types of investments, and several essential rules and regulations for your investments. Get in touch with Get In Canada to avail all necessary investment and immigration law related helps and other assistance for your business in Canada.
While investing your money in any of the Canadian investment plans, you will often come across some terminologies like risk, return, risk tolerance, liquidity, diversification, portfolio diversification, asset allocation etc. If you are still not acquainted with these terminologies, you may be puzzled and confused while dealing with your investments. These terminologies are essentially important because they are related to your prosperity as well as tell you about the loss and ruining of your investments.
The word “risks” tell about the possibilities of potential loss in your investment. The risks alert you about the uncertainty of numerous situations which may either give a good return of your investment or may result with loss of your money. You will find risk sections in almost all types of investments. Interestingly, whenever you find the possibilities of a higher return on an investment, the higher risk factors in the same investment is inevitable.
The word return is also known as ROI which refers to the growth and profit of your investment. The ROI normally varies based on the types of investments. However, in some investments the ROI can be predicted accurately. The ROI in investments, come in two basic forms i.e. interest and dividends. The interest is the interest of your money as laid down in the contract. The dividend is the portion of the profit of the company intended to give to the investor as per agreement. The increased value which is technically called “capital gain” of your investment which you can sell for a profit.
The risk tolerance is how comfortable are you with the risk often not knowing the loss or gain. If your preference is no risk or less risk, you are “risk-averse” or low-risk tolerance. If you want to take the risk which can result in a higher loss, then you are high-risk tolerance.