When you take a risk assessment, you may find that you’re actually a Conservative, Moderate or Aggressive investor. However, the fourth possible result means that you can’t invest, because you’re actually Risk-Averse.
But why isn’t investing for people who don’t want to or can’t take risks? Keep reading to find out.
All investing has risks
From the steady and predictable performance of Treasury bonds to the often-volatile stock market, every investment vehicle has some risk to it. While the level of risk depends on the specific assets, its presence is unavoidable, and so this is something that every would-be investor has to accept.
If you’re unwilling to take any risk with your money or if any loss would be disastrous to your finances, then you should wait until things get better for you before starting to invest. If you still choose to begin, you might end up facing a bad situation that will be difficult for you to deal with.
This is why knowing your risk profile is so important. It lets you see if you’re ready to begin your investing journey, and also helps you find out which investments match the level of risk that you’re comfortable taking.
Of course, this doesn’t mean that there’s anything wrong with being Risk-Averse. It just means that you aren’t ready to begin your investing journey yet.
Your risk profile can change
The factors behind having a Risk-Averse result vary depending on your situation and attitude towards risk. These things can change over time, so when you take a risk assessment again, you may find that you have one of the other three results.
If this happens, you can go ahead and start investing. For best results, use your risk profile as your guide for choosing which investments to put money into.
Don’t forget that you don’t have to invest to the highest level allowed by your risk profile. This means that, if you’re an Aggressive investor, you can still choose products that match a Moderate or Conservative profile. Moderate investors, on the other hand, can also put money in Conservative products.
