fbpx

Investors are mainly of two types, Risk Seeking or Risk Averse, and investors when they plan to start their investment, they always have a dilemma, what type of behavior they should opt.

Let us first understand what both these behaviors do, Risk Seeking or Risk Averse exactly mean.

Risk Seeking Vs Risk Averse

Understand it through an example, in any investor get two options, to choose from, one an investment that gives a sure outcome, and second, an investment that offers a better-expected value. If a person chooses option one, that is sure outcome over a gamble of getting the better-expected outcome, then the person has risk-averse behavior. But if he chooses option two, he is risk-seeking.

Which Behavior Is Best To Opt? 

Well, if you ask an expert, his answer would be “We should be both risk-seeking and risk-averse”.

People generally behave risk averse when their focus is mainly towards profit and tend to choose a sure profit over a chance to achieve a bigger profit.

If we talk about risk-seeking behavior, then people generally opt for it when there is a loss. People are not willing to cut their loss and accept a sure loss when there is a small chance of making a break-even.

If we overview then people mostly are risk averse when they want sure profit and very few people are attracted to risk-seeking, as they averse to a sure loss.

When To Be Risk-Seeking? And When To Be Risk Averse?

You might have understood that for a successful investment, an investor needs to opt for both behaviors, risk-averse, and risk-seeking, as per his portfolio, goals, and most important market trends. Generally, investors must be risk-seeking when we are in profit and we should be risk-averse when we are in loss.

In case if the investors follow inverse that is if they become risk-seeking in the domain of loss and risk-averse in the domain of profit, then there are chances that a manageable loss can turn into an unmanageable loss.

So basically, an investor neither must be purely risk-seeking nor he must be purely risk-averse. Instead should be risk-seeking in the domain of profit and risk-averse in the domain of loss.

Also Read: Looking For Dividend Plans To invest? Here Is What You Must know!!

Risk Seeking or Risk Averse, Which Behavior to Opt?

60,723,169 views
What is Lorem Ipsum? Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

Why do we use it? It is a long-established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here, making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for ‘lorem Ipsum will uncover many websites still in their infancy. Various versions have evolved over the years, sometimes by accident, sometimes on purpose (injected humour and the like).

Where does it come from? Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC, making it over 2000 years old. Richard McClintock, a Latin professor at Hampden-Sydney College in Virginia, looked up one of the more obscure Latin words, consectetur, from a Lorem Ipsum passage, and going through the cites of the word in classical literature, discovered the undoubtable source. Lorem Ipsum comes from sections 1.10.32 and 1.10.33 of “de Finibus Bonorum et Malorum” (The Extremes of Good and Evil) by Cicero, written in 45 BC. This book is a treatise on the theory of ethics, very popular during the Renaissance. The first line of Lorem Ipsum, “Lorem ipsum dolor sit amet..”, comes from a line in section 1.10.32.

The standard chunk of Lorem Ipsum used since the 1500s is reproduced below for those interested. Sections 1.10.32 and 1.10.33 from “de Finibus Bonorum et Malorum” by Cicero are also reproduced in their exact original form, accompanied by English versions from the 1914 translation by H. Rackham.

2 thoughts on “Risk Seeking or Risk Averse, Which Behavior to Opt?”

  1. Pingback: Exit Load In Mutual Funds, Does It Benefits In Any Way?

  2. Pingback: Risk avoident wealth investment – Site Title

Comments are closed.

No posts found!