You need to understand the topic of recognize risk preferences for investors. This is because it has a connection with yourself as an investor or potential investor. If you recognize risk preferences for investors, then you will recognize your character in dealing with risks to your portfolio.
By recognizing risk preferences for investors, you will more easily arrange a portfolio. This is because you have been able to analyze quickly the level of risk you are willing to accept and the level of returns. This is important because you may have a main job, limited time, limited funds, and others.
Recognize Risk Preference with Investors – What Type Are You Included?
Which type of investor are you? Below, there are 3 types of investors that might be a part of you. Please recognize risk preferences for investors. Or potential investors.
Risk Seeker. Types of investors who dare to take risks.
Investors who have high-risk preferences and really enjoy risk. This type of investor is very fond of stocks that have high price fluctuations or high beta stocks. They dare to invest in investment instruments that contain high risk, for example, derivative instruments or foreign currency deposits. At this point, recognizing risk preferences for investors can be seen in yourself. If you enjoy high-risk investment instruments, then you are a risk seeker.
Risk Aversion. Types of investors who are afraid or reluctant to take risks.
Investors who are included in the category of low-risk preferences have a tendency to choose investment instruments that are conservative or prioritizing security. If we look at this, most individuals are conservative investors. This type of investor tends to not want to take additional risks that they consider unnecessary.
The Risk Averter type will be happy if someone offers a stock that has a low beta. Low beta means that stocks have a low risk. Therefore, they tend to choose investments with relatively low-risk levels such as deposits, government bonds, or bond mutual funds. If you feel you are in the risk aversion category, then you have more friends of the same type.
Risk Indifference / Risk moderate.
Type of investor who only dares to bear the risk that is comparable to the return that will be obtained. They expect a high expected return with the greater risk of blocking. When investment risk gets smaller, they expect a smaller expected return. Or we know it as a term High-risk high return, low-risk low return.
Indifference investors always compare the level of risk and expected return. Investor moderate likes stocks that have high stock beta and high returns incomparable values. This type of investor will consider the types of investment instruments in his portfolio and manage funds strictly on high-risk instruments. Generally, they choose to invest in blue-chip stocks, state company bonds, and mutual funds.
You can read another interesting articles:
Research Before Starting Investment: Your First Investment,
Pay Attention to the Use of Loans to be More Useful,
Basics of Investment Decisions in Portfolios