Invest At Your "Own Risks"!

When it comes to investing, we all have different attitudes towards risk. So, get to know yourself! Regardless of which investment type, you should carefully consider the level of risk involved in each investment and how you feel about that risk. For instance, you should consider how comfortable you are with the possibility of losing money or that the returns on your investments could fluctuate widely from year to year. Most people are comfortable upon gaining (who is not!) but they just can't bear with the sight of losing, to the extent they can't sleep or eat well! In that scenario, perhaps it would be wiser not to invest your money into volatile investments such as stocks.

There are generally 3 categories of risk profile, i.e., conservative, aggressive, speculative. Is it possible then that a person may expose his or her investment in a combination of these risk profile at any one time? Yes, definitely. We need to take into account a person's attitude towards risk may change over time, due to various circumstances. Besides, a person may want to diversify his or her risk by spreading the investment portfolio into more than one or all of these categories. That way you will not succumb to burning all your hard earned money in case your higher risk investments do not work out! I shall discuss about investment portfolio allocation in a later post.

In identifying your risk profile, it is also important you need to know what you want to achieve and when you want to achieve it. This is what we term as Financial Goals. eg., Are you saving for your children's education? Or is it for retirement? Perhaps you want to buy your own house? The answer to these questions will help you determine which risk to take. Alternatively, you can seek professional advice (eg., a qualified Financial Planner) for guidance, using a Risk Profiler tool.

For me, I am a moderate risk taker and I certainly do not belong to the conservative group. Trading in high risk instruments such as commodities and foreign exchange is not my cup of tea! I also don't believe in "Get-Rich-Quick-Scheme", having observed so many of these "high-return" promises turn out to be scams or unsustainable! There is really no short-cut to success...so be prepared to work hard and work smart for it!