How have you been? With the weather getting kinder as days pass by, I hope you’re kind to yourself too! Now tell me:
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What I was up to: I’ve had a love-hate relationship with this week: I loved being productive to plan stuff ahead, loved the weather too, OBVIOUSLY! Hated that I had to drop by my dentist’s again and absolutely hate posts like this:
It’s appalling and rather sad to see people crib about losing money on investments and especially on crypto. I think the dictionary definition of investments is along the lines of earning passively but many amateur investors tend to lose out simply by stretching themselves far beyond how much risk they want to/can take.
So many mixed emotions, just like this picture. LOL, what am I doing?
Market ka haal: Woohoo! The market is on fire! It's running like a wild bull, breaking all previous records on the indices. We know you're feeling a rollercoaster of emotions right now, wondering if you should cash in those profits or stick to your investment game (hint hint: we totally want you to stay invested).
But hey, before you make any rash decisions, let's take a moment to analyze your risk appetite. We'll dive into that juicy topic a bit later. Oh, and guess what! The HDFC-HDFC merger has finally sealed the deal, and there's more excitement in the air with the announcement of an IDFC-IDFC merger. Intrigued? Check out our Instagram post to get all the juicy details. In other news Meta has launched a Twitter rival, Threads, and what this means for the social media space, well, only time will spill the beans!
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Humara Gyaan: Let’s face it: investments are subjected to risk. In keeping with tweets that irritate me, I thought it’d be fitting to share everything you need to know about risk appetite.
What is risk appetite?
It is basically the level of loss you can and are prepared to handle so as to gain excess returns. This is literally the first thing you must determine and evaluate as an investor before purchasing any assets.
Here are 3 factors that can help you determine your risk appetite:
1. Investment Surplus: Your risk-taking potential has a lot to do with the surplus money that can be invested after tucking away your emergency funds. For instance, if you have ₹10,000 to invest, a potential loss of ₹100 wouldn't affect your finances as much as it would when you only have ₹1000 to invest.
2. Financial situation and goals: Your monthly income, expenditure, financial commitments, etc alongside the nature of the financial goals you have will also contribute to your risk appetite. If you have kids that may be going off to college in 5 years and you have financial goals to fulfill that commitment, you can't compromise or delay that. However, if you simply invest to accumulate money for a vacation, that is a more malleable goal in comparison and will give more room for risk-taking
3. Time: The period of time you're willing to be invested in an instrument can also affect your risk appetite. If you're a long-term investor who can afford to stay invested for over a decade, for example, you may be more inclined towards taking risks since you have the time to make it up in case things go south.
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Much like this meme from our Twitterpage, your risk appetite determines how much a loss affects you. If you’re someone with a very low risk appetite, you should probably go easy on highly volatile instruments like cryptocurrencies and stay strong with low & medium-risk investments such as having a good mix of debt and equity, instead of cribbing when it’s a little too late.
That’s it for this week, take care of yourself and everyone around you,
