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Attitude
to Risk Taking
Some people like taking
risks. They jump out of airplanes and parachute to the
ground. Or they bungy jump from cliff tops and bridges.
Others prefer to keep their feet on the ground. A quiet
walk in the bush is more their style. The same applies
to buying shares. You have to feel comfortable with your
decision. Think about your attitude to risk before
choosing stock. If you're not comfortable with the
highflying approach, steer clear of shares that offer
potentially large returns but with a greater degree of
risk. Make sure you'll be able to sleep well at night.
Remember that all types of investments are a form of
gambling, though some are obviously a higher risk than
others.
That’s not to say that
the share market is the same as a casino or a racecourse
(though some shares are in the same league), but no
investment can come with a one hundred percent
guarantee. When giving your broker details about your
circumstances, make sure you include your attitude to
risk. It is a factor that can easily be overlooked but
which is vitally important.
Nervous investors may
choose to skirt the risks of the stock market and invest
their money in “safe” interest bearing accounts or
bonds. But they too wind up facing a risk, though. Their
money will not grow fast enough for them to reach their
retirement goals.
In the end, risk can't
be avoided. No matter what you invest in, there are
risks. Even if you store your saving in your sock
drawer, it's susceptible to theft or fire or inflation
but it is important to understand your attitude to risk
taking when you formulate your investment plan.
Next:
Taxation Situation
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