What it is
In investing, a risk-averse person is someone who isn’t willing or can’t afford to take any risk. They aim to completely avoid financial loss and so they can’t invest yet.
What it means for you
When you take a risk assessment before investing, you’ll learn whether you’re a Conservative, Moderate, or Aggressive investor. Another possible result is Risk-Averse, which means you can’t proceed with investing at the moment.
That’s because all investment vehicles come with risk. Some products may pose a higher level of risk than others.
When you’re risk-averse, you can only put money in banking products that are deemed safe, such as savings accounts and time deposits.
Locally, these accounts are typically insured within certain limits by the Philippine Deposit Insurance Corporation (PDIC). You’re guaranteed to get all or some of your money back in case of unexpected events like the closure of a bank.
Keep in mind that a Risk-Averse result may not be permanent. It might happen if your current situation requires you to be very careful with your finances or when you don’t know much about investing yet.
Over time, your situation may evolve, especially as you start learning more about money management or investing. You may eventually gain the confidence to invest once you have a better understanding of what it entails.
