The investment risk profile is an indicator or benchmark for an investor against different risks for each investment instrument, the lower the investment risk, the lower the yield that will be obtained. So the investment risk profile is very important and must be known by every investor, so that he can choose the right investment instrument for himself.In general there are 4 types of investment risk profiles, namely, conservative, moderate, aggressive and very aggressive. So what do you think are the factors that affect a person's investment risk profile?
What are the Factors Affecting Someone's Investment Risk Profile?
- Thread starter Suba
- Start date
Well, investing money is not that easy. When it comes to investing money, there are many things you have to consider and each thing may affect your risk profile. The actual and overall demand of the product and value of investments may play a big role in this regards.
One thing that affects a person's investment risk is their income level. Most people with low income will go for low risks. While those who earn more go for high risk investments, though most of them are well calculated. That is why they say that you use money to make money, the more money you invest, the higher the amount of profits.
- Thread starter
- #4
I totally agree with your opinion, a person's income will also greatly affect the risk profile, apart from that, married status and having children will affect the investment profile, in contrast to people who are still single and do not need to think about family needs.
I am of the view that one's investment risk profile would be influenced by the amount of money at his/her disposal. If a person has a large amount of money, his/her investment risk profile would be different from that of a less monied counterpart who would be more averse to risk.
When going into any investment, it is best to always make sure you understand the kind of risk involved and if you can actually go along with it. Do not take on something with more risk than you can manage simply because you want more profit.
- Thread starter
- #7
That's right, before investing we must study the types of risk, so we can measure our financial capabilities first. before purchasing investment instruments.
The age of a person can affect their investment risk level. Generally, younger people are more open to making risky investments because they have the luxury of time to get it right if it goes south
- Thread starter
- #10
I agree with you, a person's age also greatly affects the level of risk, young people will be more willing to take high risks while older people will take low risks. So the risk profile can also be formulated as follows 100-age investors are high risk, for example if you are 25 years old then 100-25=75 is high risk.
Many people often say that a rich person would invest more and a rich person has a high risk tolerance capability. However, I do not think that this may necessarily be the case all the time. A smart businessman always tests the opportunity by investing a little amount of money all the time.
Generally speaking, younger people tend to be more aggressive because if they make a loss, they have time to gain back the money. Older people are more conservative. They cannot afford to lose their money prepared for retirement.
