How Risk Averse Are You?

The Definition of Risk

In this case, when dealing with the world of personal finance, we will focus on the first three words – the possibility of loss. Specifically, financial loss.

Risk Averse Definition

Risk aversion is defined as avoiding risk. Pretty straightforward. If you are a risk-averse investor, you will seek out investments with a low probability of declining in value. This is because you value preserving your money more than seeking out the best possible return.

How to Know How Risk Averse You Are

I developed a quick 5 question quiz to help determine your level of risk aversion. Some of these questions have subjective answers, and others are objective. Regardless, all of them will help you figure out what risk level you can accept, which is helpful to know when building your own investment portfolio

Why it Matters in Personal Finance

Understanding your level of risk aversion is a valuable step in ensuring you build an investment portfolio that suits your needs. After all, personal finance is… personal.

Want to read more about how to determine how risk averse you are?

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