In this article, we will discuss what is risk profiles, and the pointers one needs to look after to understand his/her risk profile. So, let’s get started.
Factors to know your risk profile:
3) Job/Work stability:
4) Assets/ Liquidity:
Risk tolerance is the level of risk an investor is willing to take, it is different from risk capacity as some people have high-risk capacity but they are not willing to take many risks. There are three types of risk tolerance levels:
Conservative- The person whose risk-taking capacity is high or low doesn’t matter but is not willing to take risks is called conservative or low-risk to reliance folks.
Moderate- People who panicked not sell during the falling period are moderate risk tolerance. As they are worried about the falling price but not taking action means they are taking risks.
Aggressive- People to whom it doesn’t matter whether the price is falling or going up have a high tolerance level. Generally, these are the long-term investor to whom short-term movement doesn’t matter.
What Should Individuals Do?
Risk profile changes with change in time as a change in job or assets or anything which impact the risk capacity. Knowing your risk profile is very important to understand what kind of investor you are and in what kind of stocks or funds, you should invest.
Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.
Originally Published On:https://blog.investyadnya.in/what-is-risk-profile-risk-tolerance-how-to-know-your-risk-profile%ef%bf%bc/