Risk Appetite
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Evaluating Risk Appetite and Risk Tolerance
  • Risk Appetite is an individual's readiness to take risks which depends on various factors-age, experience and knowledge.

  • Risk tolerance is an individual's ability to take risks, which depends on various factorsliquidity needs, nature of employment, time horizon and investment objectives.

  • Before making an investment or creating a portfolio, it is very important to know your ability (risk tolerance) and readiness (risk appetite) to take risk.

  • It will help you choose the right investment products to match your return objectives.

  • Furthermore, understanding risks and analysing them would be useful in determining a good balance of risk for you to maximize your returns.

  • A combination of risk tolerance and risk appetite should be considered before making any financial decisions

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