Steering clear of danger is exactly what we are programmed to do as humans. That’s why, we’re told at least, we seem to cling to things when we feel like falling in the night or why we flinch when playing with virtual reality. In relation to investments, moving away from risk is the best way to ensure that you are in control of the situation or that you have the ability to micromanage each step in the right direction.
Investing for risk averse people is a tricky road to begin with but once you have the knack of finding the right investments at the perfect time, you will start to reap the rewards. You may be flying into the world of investments for the first time or about to embark on an adventure to sure-fire returns, so what advice can we offer for risk averse people that want to invest?
Who is a risk averse investor?
Identifying yourself as risk averse is the first stage to building your portfolio of short and long-term investment strategies. Once you are confident and set boundaries to your investments, you can begin to achieve the returns that you hoped for while also understand the risks involved.
A risk averse individual is one that prefers to secure an investment with lower potential returns but one that has known risks. You will be able to see and evaluate the risks and how these may affect your investment should they pan out in a positive or negative way. These are usually firm and clear investments such as government bonds, dividend growth stocks, stocks, banks and corporate bonds. All of these do, clearly, have some risk involved throughout the time of your investment, but they are less likely to put you in any position where you will be losing a lot of money.
What is the opposite of a risk averse investor?
To ensure you understand which side of the coin your investment fortunes lie upon, someone who is not risk averse will seek the best and highest returns without having a full idea of the risks. An investor in high-risk avenues will have to contend with the quick fluctuations in the market and have to cope with these issues and how they can create an issue with the overall returns.
How to invest as a risk averse individual?
Investing within your means. The simple and effective method of coasting through investments is to not make big risks that impact on your life, income or assets. Choosing the right investment will always be something of a thrill but choosing one that with known risks will provide you with more assurances that you are comfortable with the losses should they happen.
If you are risk averse and wish to discover the world of investments without needing to break the bank or put yourself and your family under pressure each month, you can gain expertise and insight into this world by calling upon our team at MacFarlaine & Brooks.
The purpose of this blog is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice.