risk

Risk Investment Personality:

Risk is an essential element of the life.  There is always the chance that something won’t work out for us and this chance is called risk.   There is a risk in anything choose to do in life including the financial life.  Risk is used to dealing with it either on a negative basis or a positive basis.

Basically, there are two types of personalities concerning risk.  Knowing which one is an important step in managing the investment portfolio properly [Bleichrodt H., 2001].

Risk Taker:

 The first type of person is the risk taker.  This kind of person who lives for the thrill and loves to take a chance.  A person like this is easily involved in the highly risk options or being danger where the prices irregular by the hour. This kind of person takes the greatest risk to lose the money because of the poor spending. This type of person need to check and reconsider the spending options or get a second opinion from the third party [Tversky A., 1992].

Risk Avoider:

The second type of person is the risk avoider.  This kind of person who always looks for things to not turn out good, likely to say they can’t trust anybody. For example the story of “Chicken Little” it’s familiar with this type of person. This type of investor is mostly like to miss out on returns and end up with the same money he or she started with. This kind of person need to make sure and check they are allocating a bit too much of money in the periods, money markets or other likely safe and liquid investments.  Again a third party can often help you in being objective in the evaluation [Von Winterfeldt D., 1986].

REFERENCES:

1.      Bleichrodt H., Management Science, 2001.

2.      Tversky A., Journal of Risk and Uncertainty, 1992.

3.      Von Winterfeldt D., Decision Analysis and Behavioral Research, 1986.