We’ve been discussing planning for the future and that savings are great, but income has to be multiplied through investments. What does this mean for you though? The first thing to understand is your risk profile: are you aggressive, moderate, or conservative? Meaning how comfortable you are with potentially losing money because the general philosophy is a high risk, high return.
If you are very open to the risks associated with high returns instruments, then you tend towards high risk. If you are more comfortable with a steady but relatively low return on your investments with minimal risk then you are conservative. If you’re in the middle then you’re conservative.
What does this mean for you? Knowing the risk profile of your proposed investment is critical so you can manage your expectations. If you’re in the earlier stages of life, then you could be more aggressive as there is potentially more time to recover from any losses you may incur. As we mature and get closer to the end of our active working life, then it makes more sense to lean towards moderate to conservative, even if by nature you are a high-risk taker.
I anchored a Finance Summit a couple of weeks ago where I shared the key things to expect in 2023 as well as some investment options to explore.
An extract of the deck I shared at the Summit with this section focusing specifically on asset types to consider for investments has been attached to this post.