Appendix 1: Your risk profile

As you have already discovered, emotions have the capacity to destroy hard won investment returns as they tend to lead you astray; they tempt you to get into things that perhaps you should not at the peak and make you exit otherwise sensible long-term investments at the lows. While we would all like to think that we are capable of rational behaviour and avoid such obvious wealth destroying strategies, the empirical evidence is that most investors do not. What we can do though is to identify portfolios that sit within our risk comfort zone, where we have a greater chance of standing firm. This chapter helps you to understand how you can identify your risk comfort zone.

What is your risk profile?

As investors, ...

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