BONSERNEWS.com – Stocks are one of the alternative investments that people can choose. However, before starting to invest in these capital market instruments, it is better if potential investors are familiar with the risk profile or risk profile they.
Basically, risk profile be a reflection of a person’s willingness or ability to take a risk, in preparing a financial plan when investing.
Thus this profile can be used to make decisions in determining the right investment allocation. risk profile can also be used to reduce various potential threats and risks that can occur when an investor makes a decision.
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risk profile is the main indicator to determine the level of tolerance of an investor in facing risk when investing in stocks. This is because the stock itself is an instrument that has high volatility, which of course makes the potential for profits and losses also high.
Of course, every investor has a different risk profile. Big-time investors like Warren Buffet certainly have a different profile than novice investors.
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So, what are the types of risk profiles in stock investment? In general, an investor’s risk profile can be classified into three parts, namely conservative, moderate and aggressive.
Investors with a conservative risk profile or risk averse usually requires more return on investment (returns) is stable, in a relatively short time such as one year. The selected investment product usually has low risk with low but relatively stable investment returns.
Beginner investors who are studying stocks usually fall into this category. They tend to avoid investing in stock products that have a high risk and fluctuate value.
Conservative investors allocate more of their investment funds to low-risk instruments such as bank deposits, corporate bonds or government bonds. Meanwhile, for risky instruments such as stocks, conservative investors only allocate a small portion of their investment funds, choosing stocks that tend to have good fundamentals.
Investors with a moderate risk profile tend to be more willing to accept the risk of loss from investment funds, as well as expect returns higher than the conservative profile. The choice of investment instruments for investors with risk profile moderate usually has an intermediate period of about 1-3 years.
Even though they tend to be willing to take bigger risks, moderate investors are still careful in choosing the type of investment instrument. So they usually limit the amount of investment in risky instruments.
Thus, several investment products that can be selected, such as stocks blue chips with relatively more stable price fluctuations, and has potential value investingwhich is also combined with investment low risk such as government bonds and corporate bonds with a balanced portion.