All of the recent hype surrounding Gamestop, cryptocurrency, NFTs, and meme stocks made me question-
is anyone risk-averse anymore?
It felt like a good time to reexamine why I’m passing on these types of investments in the first place-
because of the risk they carry.
The Definition of Risk
According to Merriam Webster, the definition of risk is the “possibility of loss or injury.”
the possibility of loss. Specifically, financial loss.
In this case, when dealing with the world of personal finance, we will focus on the first three words-
Though, risk is not a binary measure… the other variable to consider when determining risk is time.
The longer you hold an asset, the less risky it gets (usually).
Risk Averse Definition
Risk aversion is defined as avoiding risk. Pretty straightforward.
If you are a risk-averse investor, you will seek out investments with a low probability of declining in value.
This is because you value preserving your money more than seeking out the best possible return.
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