High Returns Vs Low Returns

If you have invested in multiple assets, you might have noticed that some assets give you high returns and some assets give you low returns. For example, investing in stocks normally give you high return, whereas investing in bonds give you low returns. If you have been investing for a long time, you might have also noticed that assets that give you high returns are high risk and those that give you low returns are less risky investment options.

What are your preferences for investment?

We have to analyse our risk appetite before making any investment decision. And it's the mantra of investment that the higher is the risk factor, the higher is the return too. I have a diversified portfolio. I have investments in high return modes with high risks. But since my risk appetite is not too bug, I limit it to meet my risk appetite. I have more investments in long term mutual funds and such schemes that involves low or moderate risk. I also go for traditional saving accounts, binds and gold. So, I keep a diversified portfolio meeting my expectations and taking care of my risk appetite.

Analyzing your risk tolerance level is very important for investment. YOu will also have to balance your portfolio with high risk assets and low risk assets. Diversifying is the key to mitigating risks.