Play at your own risk with your finances!
Yes, you have to play at your own risk because you are an individual person with a particular financial situation, with your own objectives goals and risk profile.
Therefore, it is necessary that your financial plan to be tailored to your needs and the actions that you´ll take should have a direct relationship with the risks that you are willing to take.
If you are the kind of person who is very careful about financial planning and you work around the risk factors with great detail then you have to know the risks that you're facing. That’s because when risks turn into reality they can devastate you financially to the last penny you have.
If you are the kind of person who has the fundamental knowledge about financial planning you can play at your own risk using the fundamentals of financial planning.
How can you play at your own risk?
Just answer this: Are you comfortable with your financial situation and you’re really sure of what you’re doing?
If your answer is negative or you aren’t sure, it is highly probable that there are some aspects that don’t fit into your risk profile or you just need more information.
Risk profile? What is that?
A risk profile is precisely what are you comfortable with. For instance, if you understand how to trade options, know the risks associated and you want to add them to your portfolio, that’s part of your risk profile.
On the other hand if you don’t know how options work, or at least understand the risks and you trade them anyway with the education fund of your children, then that’s precisely the opposite to play at your own risk because the education fund should be invested in a low risk vehicle.
So, it is very important to identify your personal risk profile thinking about the kind of dangers you are likely to face. Everything has to be taken into account like your lifestyle, profession, habits, hobbies and interests. Other than these external factors like market conditions, economic forecast are also taken into consideration.
Research is an important and key function to identify your risk profile. Even more, if you’re doing your own risk management and planning your personal finances yourself.
You should put in extra effort in the form of research to know what your financial advisor is talking about or if you don’t know how to plan something.
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