What is my risk appetite? Have you ever thought about this question in financial aspects? You might be wondering what it has got to do with the finances of a person.
This is a very important questions which needs to be thought over by every person irrespective of where he is investing (Financial market, gold, Land …anything).You should always have an idea about how much you risk you can take to increase the monetary gains. Let’s explain this with a real life scenario –
You are planning to buy property at a suburb location in a city for investment purpose.You have shortlisted two options
- Option A – Prime location property with very good chances of increase in price in coming future, thus multiplying your fortune. But there is a lawsuit in progress over the property which might lead you to loose a major share of your investment.
- Option B – Another plot with limited future prospects in terms of prices gain. A safe bet you can say.
What if you were actually making this choice? Which option you would choose.
- Option A which can multiply your investment beyond your imagination or make you loose a major portion of it .
- Or Option B which is a safe bet.
Now the next questions coming to your mind would be
What are the chances of option A turning into a bad investment
How much is the Money involved.
These are the questions which should be answered by you only.At what amount of money and risk factor being involved you would have choosen the option A and option B.This will give you some clarity about your financial risk appetite.