Being general public, many of us always want to invest in the share market. But we probably don’t know how much should we invest where should we invest and how much is the amount of risk we should take or we can take?
Here we will talk about the amount of risk one should take or how can you decide the appetite of your risk-bearing.
Every investment product has some risk evolved in it. No investment product is risk-free. The fact of the matter is the degree of risk involved, it may be very low, low, medium, high, or very high and most of the time the degree of risk decides the degree of return.
Before the 2008 crisis in the USA, many were used to thinking that the housing market is not a bubble. Almost every major bank and investment form looks like doing everything just right and fine till time things went the other way.
Even then some analysis could see that it was a bubble that was going to burst quite soon.
The co-founder of Wintwealth, Mr. Anshul Gupta said, the lessons from the 2008 crisis are quite simple. We never know what future is holding its hand and that is why investments are risky.
If anyone is taking higher risks or lower risks it is because of the ability that entirely depends on the individual situation and goals and more importantly where he and she is coming from that is what is risk appetite.
For example, Mr. A has with peers or friends who have invested a lot of money in risky investments and lost their money and Ms. B has been with the peers who invest in risky stakes but get higher returns most of the time.
In this case Mr. A will prefer low risk and Ms. B will prefer higher risk. This means because of the situations they are in and the places they are coming from are different so their risk appetite and willingness to take the risk are different.
Generally, when you want to you decide where you want to invest you should do these checks. For how long you want to invest, what what are the percentage of returns you are looking at, are you willing to and able to lose the money you have invested in case of high-risk investment, are you ok or convinced with the return in case of low-risk investment?
Combine all these and you will be able to decide your risk appetite after which you can decide where and how much to invest.
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