WHAT IS YOUR RISK APPETITE?

 Good Day Readers, 

Happy thanksgiving to our American followers and Happy Black Friday to the rest of the world. 

Today we'd be taking a detour from discussing stocks to explaining what "risk appetite" really is.

According to wikipedia, RISK APPETITE is the level of risk that an organisation or person is prepared to accept in pursuit of its objectives. In lay man terms, it is the level of risk you are willing to take in pursuit of your ROI (return on investment).

When trying to determine your risk appetite with investments, it is very important to note the various of levels of risk listed below;

  • Low Risk - The goal here is just to secure your investment as the return on the investment is not so important to you as getting back your principal. Under this level of risk are treasury bills, money market, Mutual Funds amongst other government backed investments.
  • Medium Risk - People with this risk attitude or objective in mind just want to grow their income. It is important to note that if this investments are not properly managed, capital can be lost. Examples of medium risk investments are Stocks (Global and Local Shares), Agro investment and real estate investment.
  • High Risk - The investments under this level are very unpredictable and is subject to change at any time which in turn can bring about loss of capital. Although when it works out, the return on such investments are very high. Types of this investment are cryptocurrency and Forex. 
To better explain the above, would be posting an image from Money Africa below;



It is time to think and determine what your risk appetite falls under from the three listed above. My advise is to divide and conquer, which is to spread your funds round the 3 levels. 

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