You may already consider yourself a born gambler or a safety first type of stock market investor. In either case our short checklist will help you classify whether high risk investments fit in with your personality and your current situation.
- How much of your savings do you plan to put into high risk investments?
- All of them.
- Enough to make the investment worthwhile but not enough to ruin my retirement
- What savings? I plan to borrow the money.
- Your high risk investment starts badly and you lose 10% in the first week. What do you do?
- Phone your broker and tell him to double your investment.
- Hold tight but mentally put a limit on when you plan you sell if it keeps losing.
- Break out in a cold sweat, pick up the phone in your shaky hands and then drop it on the floor.
- You see potential bargain stocks strongly recommended on the internet, but you are not sure what La Compania Peruana de Basura actually is or does. What is your next step?
- Phone your broker and tell him to buy all the stock that you can afford, you got a good feeling about it just from reading the name.
- You do a little investigation and find out what the company is and whether their prospects look good before ruling it in or out.
- It sounds dodgy, best leave it alone.
Alright, so it was just a bit of fun but you get the idea. Some people need to keep a check on their gambling instincts in order to avoid making rash decisions while others either don’t have the personality or the financial security to get involved in high risk or high return investments. Considering your needs and abilities before making any investments may help you avoid problems later on. And this is obviously something you want to do!
