Two investment risks every Bangladeshi should know about

Every investment or saving product has different risk and returns profile. Generally, for higher risk investors demand higher returns. For example, since stocks are riskier than fixed deposits, a rational investor will expect to earn a higher return from stocks compared to fixed deposits.

In Bangladesh, there is a tendency for investors to only concentrate on higher returns and ignore the risk part completely. This is why so many people in Bangladesh get caught in MLM (Multi-level marketing) Ponzi schemes. They concentrate on the upside and completely ignore the downside.

In this blog post, we discuss two very important risks people should be aware of.

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Portfolio return calculation – ignored and misunderstood
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Portfolio return calculation – ignored and misunderstood

Why do schools have report cards for students at the end of each term? To assess if the material taught was understood by students.

For stock markets, the relevant report card is portfolio return (along with relevant risk metrics). Yet, most investors (both institutional and individual) in our country, either do not calculate their returns or make calculation mistakes that make the numbers useless.

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