Investment – Personal Risk Assessment

By Paul on November 28th, 2008

Sample image (credited to Digeratilife)

Before one leaps into investing into the stock market and equities, it is important to know what is one’s risk profile.

In another way of saying, it is important to know yourself before you do something. It applies to many other areas of your life as well. For example, you would need to know what skills you have before you would really know what job you can do. Or what your strengths and weaknesses are before you play a competitive game.

The same goes for investing – you need to know your needs, wants and character before you should invest.

How people invest depends on a variety of factors:

age
family needs
current and future income
current and future expenses
cashflow at certain periods of life (marriage, buying a house etc)
ambition and wants
character

Such factors influence your way of investing and what types of instruments you would use for investment. I will elaborate more about the factors above in another post but it would be good for anyone to start taking a basic risk assessment quiz to know oneself better before investing.

Here are 2 free resources I have sourced for your use:

Passive Income for Life