While evaluating your investment plan, you must consider your risk appetite. Individuals with a high-risk appetite are willing to take more risks to earn higher returns. However, those with a low-risk appetite will likely stick to safer investment opportunities. The returns may not be as great, but there’s limited exposure to market risk. Let’s understand better how your risk appetite impacts your investment choices.
High-Risk Investments
Most market-linked investments are considered high-risk investment plans. They could offer very high returns. However, they depend on the market and can be volatile. Stocks, mutual funds, IPOs and equity-heavy Unit-Linked Insurance Plans are all considered high-risk investments.
Medium-Risk Investments
These investments, structured within an investment plan, aim to balance risk with reward. They mix high-risk investments with safer options that provide steady returns during market downturns. Debt and balanced mutual funds, government and corporate bonds, and gold investments fall in this category.
Low-Risk Investments
Low-risk investments expose you to limited or zero risk. PPF, NPS, Post Office Savings Scheme, Bank and Company FDs, SCSS, RBI Taxable Bonds, and Traditional Life insurance plans all fall under the low-risk category. Safest investment options as the ones mentioned helps you grow your wealth even after investing in low-risk investments.
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