Skip to main content

Understanding your appetite for financial risk

Chasing returns is a good goal, but ...

Are you underestimating the inherent risks while chasing lofty goals like - 18 percent annualized returns via equities?

Or doubling your property worth in 5 years via real estate?

Or hoping to double your money via cryptocurreny?

Are you someone who looks at fixed returns instruments like FD/ PPF etc as something that is for losers?

Well,

I am no one so say which asset class will give what returns (except fixed returns instruments) but when you are "sold" something with a "grantee" of "assured" x% returns, do you see the risks? Or is seeing risks is for the boring or losers or unexciting people?

When you are chasing 15  percent returns via equities, do you understand that there may be times when the returns may be higher but there may be times when returns may be lower, or even negatives. Historically it has always been good and will hopefully continue to be, but are you so over-enthusiastic that you even put your daily expenses or contingency fund at risk of permanent loss of capital because you chose to ignore the risk?

Or do you ignore the risk of liquidity (rather, lack of it) while investing in real estate to such an extent that you face a liquidity crunch if anything urgent comes up and you may be looking to do a distress sale of your fancy apartment?

Each of us have our own assumptions and expectations and capacity, but are we asking the right questions as far as risk appetite is concerned? 


Comments

  1. This is a knowledgeable post. One should know his goals as well as ability to save for future. One can’t be assured about which asset class will give what returns but by getting some advice from an expert, you can get an idea. I too got consultation and thorough advice from a certified financial planner india india and he provided me a list of best opportunities to invest in according to current market scenario.

    ReplyDelete

Post a Comment

Shop @ Amazon

Popular posts from this blog

Snaps from The Himalayas

Some glimpses of one of the best landscapes in the country. Why long for Alps when our own old, enigmatic yet beautiful Himalayas provide such magnificent and picturesque sceneries!! Have a look. Enjoy. Location - Garhwal Region, Himalayas which lie in the state of Uttrakhand.

destined for greatness ...

He had one final look at his work. The ending was perfect. The beginning was perfect. Yes. The pace slackened a bit in middle, but it was acceptable. A handful of people may not like it. He couldn't please all. But he was sure that he would please most of the people, the ones who mattered. Above all, the work would impress him. He had surpassed his own expectations. He had read the final draft for the 27th time by now. It was perfect. Next day he would contact the publishers. He was sure that nobody would refuse. They would lap up his work and offer him some handsome sum of money. Probably much more than any of the first time writers could ever dream of, at an age of 29. That would bring it all - name, fame, recognition, money ... everything! He was destined for greatness, as a part of the title suggested. Maybe in a year ... or two years at max, the world will recognize his greatness. Maybe, that would be fitting reply to the world which had branded him as a insecure, reclusive, w...

Get cashback while doing online shopping

Originally published on BeingFinWise __ Cashbacks are an amazing way to save money while shopping. More so while you do online shopping. In addition to regular deals and discounts, you can get cashback if you go via affiliates . This way you can get cashback on your online shopping, over and above your regular deals. Some of the popular affiliate networks offering cashback on online shopping in India are Cashkaro ,  Gopaisa , Pennyful etc.

Assorted Random Semi-Verses

Memories Isn't every memory a magic? Making you lose the sense of time. Which is so much beyond the realm of logic. Though sometimes they are mere illusions But they keep coming back to you, And make you feel nostalgic! ___ The Dark Side With every talent comes a curse, From every gift speaks a caveat aloud, Even the beautiful moon has a dark side, And every silver lining has a cloud! ___ The Race Somewhere in this race, Some time during the run, I lost myself in between, And forgot to have fun. ____ I write ... I sometimes write random words, Which hardly make any sense; But I just felt that you should know, That in some corner of this little world, I do have a little presence!

What's the purpose of investing?

"Investment" - This word is much used and often much abused one. One keeps on hearing this almost all the time be it in office or catching up with friends or attending a family functions - almost everywhere. More so when we are fed with lot of information about how one needs to make money work to get more money. However, for a lot of people, the clarity on one question is often lacking - What is the purpose of investing? And even if one knows his/ her purpose of investing, it is often not implemented in real life. For instance, purpose of one's investments may be having sufficient funds in times of need. Yet they may opt for a personal loan when faced with pressing need for money. Based upon my observations, below are some of the most common purpose of investments (in no particular order) I invest because there is some sufficient funds lying with me and I can get great returns. I am investing for some specific goal - buying a house, education of kids, m...