THE RELATIONSHIP AMONG LONGTERM PERSPECTIVE, RISK CAPACITY AND RETURN.

Investment is a game of long-term horizon.The ability to survive difficult time can mean success or failure.

Investment takes time to yield return.

For example planting orange tree and  buying an orange.

Which one yield result and pay in the long run.

But the difficult question is how long can we survive for investment to yield result.

This bring us to RISK CAPACITY.

RISK CAPACITY is how much in amount and time can we sacrifice for investment before our investment yields it desired result.

Some factor  determines risk capacity

-The amount of resources,cash or capital individual has at its disposal.

The higher the risk capacity the higher the ability to take risk

-Business need certain amount of cash or liguid investment to meet unexpected obligation and to take risk.

Some Indicator of risk capacity is working capital or Net cash flow. Measuring risk capacity in relationship with net positive cash flow is a wise one.

RISK CAPACITY AND REFUSAL TO TAKE RISK A DANGEROUS DILENMA.

Having the capacity to take risk and refusal to take risk can reduce the company  value or long-term profitability.

THE PARABLE OF THE TALENT IN THE BIBLE THE BIBLE WHERE THE SERVANT REFUSED TO INVEST AND DUG THE GROUND AN PUT IT THERE. HE DOES NOT CONSIDER THE POSSIBILITY OF INTEREST YIELDING INVESTMENT.

LEARN FROM NATURE ABOUT LONG TERM PERSPECTIVE.

Just look at the earth ,the water cycle, the four forces, the mechanical laws.

Long-term perspective was the building block not just to generate effect or water immediately.

Creating a system is a major characteristics of long-term perspective.

RELATIONSHIPS AMONG RISK, PREPAREDNESS AND RETURN.

Many believe that returns is due to luck. However the way you manage and prepare for risk and return make the difference.

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