Risk adverse vs. risk seeking. We'v heard this statement from many investment advisors. If you are young, you should generally be risk-seeking and go for more volatile investments. If you are older, you should go for more risk-adverse investments.
Human nature says we are most risk adverse after suffering psychological damage from losses whether they are young or old. The market tests the limits of psychological tolerance of price movement, how much it can withstand.
The best thing you could do for yourself is to objectively evaluate what kind of investor you are and stay within the realms of your limitations. If you are a person who can tolerate losses, for example basically take the stock and store it in a container and look at the price once a month or quarter. You are mostly able to tolerate the losses and could therefore be a bit more of a risk seeker especially on those investments you are absolutely sure will do well.
If you are a person who needs to have confirmation of a positive gain in your portfolio almost everyday, you are actually more risk-adverse and more prone to emotional ups and downs of the market.
Dividend stocks are more for you as the dividends will keep your spirit high. Maybe you won't be a billionaire, but honesty with your own personality is another road to great wealth albeit slow and steady. The most difficult part of investing is staying within your means as an investor.
Human nature says we are most risk adverse after suffering psychological damage from losses whether they are young or old. The market tests the limits of psychological tolerance of price movement, how much it can withstand.
The best thing you could do for yourself is to objectively evaluate what kind of investor you are and stay within the realms of your limitations. If you are a person who can tolerate losses, for example basically take the stock and store it in a container and look at the price once a month or quarter. You are mostly able to tolerate the losses and could therefore be a bit more of a risk seeker especially on those investments you are absolutely sure will do well.
If you are a person who needs to have confirmation of a positive gain in your portfolio almost everyday, you are actually more risk-adverse and more prone to emotional ups and downs of the market.
Dividend stocks are more for you as the dividends will keep your spirit high. Maybe you won't be a billionaire, but honesty with your own personality is another road to great wealth albeit slow and steady. The most difficult part of investing is staying within your means as an investor.
0 comments:
Post a Comment