Understanding Risk
Risk risk is the extent to which you are willing to expose yourself to loss. As individuals, when it comes to money, some of us may be more or less conservative than others. Risk profiles can range between conservative, cautious, prudent, assertive and aggressive.
Our appetite for investment may also vary according to our own unique circumstances.
When investing, by having at least a medium level of risk profile and appetite, you are more likely to generate stronger results. For example, someone with a low risk profile and low appetite is unlikely to take assertive action when it comes to investing whereas a person with a medium risk profile and a medium to high risk appetite is far more likely to take action re investing.
Risk is mitigated through careful research, analysis and the sourcing of evidence to support an investors decision to purchase a property of a particularly style or type and in a particular location.
In this case of risk, one size definitely doesn’t fit all so it is important to dot your ‘i’s and cross your ‘t’s’ .
By understanding risk, this is a way of managing and/or reducing risk during the establishment or growth of your property portfolio. At a minimum, it will enable you to make more informed and appropriate investment decisions from the outset and at best it will stop you from losing $10,000’s or $100,000’s of your hard earned equity or savings, by preventing you from investing in an inappropriate property type for your risk profile eg if you have a low risk profile you shouldn’t be doing high risk development!
Miriam Sandkuhler - Property Advisor, Buyer Advocate and Author Contact Us
