How do you feel about risk?

by Kristina on March 16, 2015 · 0 comments

live your life on the edge, risk taker, game maker, taking risks
Maybe you said I’m afraid of it.  Maybe you said I need more context before answering.  Or maybe you said I love it.  So which one are you?  Think about your day yesterday, did you take a risk on anything?  I personally don’t like to take risks, or at least I don’t think I do.

I don’t like to take risks when it comes to my money, as you know I’m a balanced investor an equal portion of both income and equity in my portfolio.  I also don’t like to take risks with my life, I am definitely not one of those “grab life by the horns” types of people, I actually don’t even like to go on the Ferris wheel because I’m afraid of heights.  At the same time I like to travel by myself, some people think this is a huge risk.  So what do you think, am I a risk taker?

Or better yet, are you?  If you take chances everyday and live your life on the edge do you also do the same with your money?  People will probably tell you that being risk adverse or adventurous with risk is a personality trait.  It’s very rare you’ll find someone who lives life conservatively but invests aggressively.  Don’t you think?

People who steer clear of risk

In my experience when clients come into my office to invest and don’t want to hear anything about investing in anything that relates to the stock market they are re usually live very low key lives.  Their investments are very low risk and they aren’t looking for advice.  They’re just looking for someone to purchase their money market fund or term deposit.

The non risk takers of the world are usually law abiding citizens who plan their lives from the time they wake up to the time they go to sleep and well beyond that.  Are you one of those people? If you look both ways before crossing the road and wait for the light to turn green before stepping off the curb maybe you don’t like taking risks with your money, just like you don’t like taking risks in life.

People who think twice about everything

These are my favorite types of clients when it comes to financial planning because they don’t make rash decisions, they don’t follow stock market trends and they don’t change their minds after making an investment decision.

When you first started reading this post, how did you answer the question?  Did you need more information before you could answer?  Then you’re a rational thinker, you’ll take risk if that’s the option that makes sense after you’ve weighed all your other options.  I know this because I’m the exact same way and it takes one to know one.

The risk lovers of the world

Did you immediately answer you love risk without even thinking about it?  The risk takers of the world are always difficult financial planning clients because they make quick decisions, don’t think about the consequences and come back to complain about their investment options when the value drops.  That’s the thing about high risk investments, they can just as quickly go down as they can go up but no one thinks about that.  People always assume big risk equals a big reward and that’s just not true.

 

 



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