Risk-Averse
Candlefocus EditorThe more risk-averse someone is, the more protection they seek against the possibility of a financial loss. They are not looking to invest in any risky assets that may lead to huge gains but rather low-risk, safe investments such as bonds, CDs, and savings accounts. By focusing investments in certain areas that offer some stability and a lower risk of loss, they are able to protect their initial capital with minimal risk of loss.
In addition, risk-averse people typically look for investments with a stable return on investment or a guaranteed rate of return. This ensures that the investor receives a predictable amount of money for their investment over a period of time, rather than the potential of a significant return that could be reaped from a more risky investment.
Individuals with high levels of risk aversion may also take out insurance policies or other financial products to help guard their assets against the possibility of financial loss. While these policies and products do not guarantee a return, they can sometimes provide a layer of protection against an unexpected expense or loss.
Overall, risk-averse individuals are not looking to push the boundaries with their investment decisions, but rather seek to minimize potential losses. They typically prefer to avoid risk and capitalise on consistency, safety, and liquidity rather than gambling on risky investments. By diversifying their portfolio and considering a range of investments with different risk profiles, investors can not only protect their principal but also have the potential to increase their wealth over time.