Identify Your Own Risk Tolerance – High Risk Or Low Risk
Sunday, January 23rd, 2011Each person has a risk tolerance that should not be dismissed. Any good stock broker or financial planner knows this, and they should make the attempt to help you identify what your risk tolerance is. Then, they should work with you to look for investments that are not going to exceed your risk tolerance.
Figuring out one’s risk tolerance consists of several different things. First, you need to know how much money you have to spend, and what your investment and financial targets are.
For example, if you plan to retire in a decade, and you’ve not saved a single penny towards that end, you must have a high risk tolerance – because you really need to do some aggressive – high risk – investing in order to reach your own financial objective.
On the other side of the coin, if you are in your early twenties and you want to start investing for your retirement living, your risk tolerance will be low. You could manage to see your money grow steadily over time.
Notice of course, that your demand for a high risk tolerance or your need for a low risk tolerance basically has no effect on how you feel about risk. Once again, there is plenty in determining your tolerance.
For instance, if you invested in the stock market and you observed the activity of that stock each day and saw that it was falling slightly, what could you do?
Might you sell out or would you let your money ride? If you have a low tolerance for risk, you might want to sell out… Should you have a high tolerance, you would let your money ride and see what happens. This is not based on what your financial objectives are. This tolerance is dependent on how you feel about your funds!
Again, a great financial planner or broker should help you determine the level of risk that you are secure with, and help you decide on your investments accordingly.
Your risk tolerance should be based on what your financial ambitions are and how you feel about the probability of losing your revenue. It’s all tied in together.
If you don’t want to deal with risks, a sensible thing to look at is taking your company public. If you want, you can look on the web for “company going public“, “reverse merger” or “reverse merger shell” and you will be able to find some good advice and strategies.