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Would you run on a slippery deck? Would you ride a jet ski without a life jacket? Would you leave port without a working radio? One of CrewFO‘s partners is here to talk about the role of risk in investing.
Applying Yachting Rules To Financial Ones…
If you work on a yacht, the chances are you don’t look for a safe and quiet life. To some extent, you are looking for variety and excitement. But how does this apply to your finances? What level of risk are you willing to take to get a higher return? The general principle is that the more risk you take, the more potential there is for a greater return, but also more chance of losing money. How would you feel about any losses? In the field of behavioural finance, studies show that we are emotionally affected far more by a loss than we are by an equivalent gain – so we are more sad when we lose £100 than we are happy when we win £100. When you invest money, you need to think carefully about your individual attitude to risk and then select a portfolio that matches that risk appetite, but another crucial factor is the time period over which you plan to leave your money invested. A younger person investing for a retirement that is four decades in the future has more time to make back any losses, so they can take more risk than someone older who is about to retire and will soon need to start drawing on the money they have saved during their working life. A financial adviser can talk you through the concept of risk and together you can explore your individual risk appetite, not just now but at regular intervals as your circumstances change and your need for certainty in your life changes.Get in touch with Crew FO to know more about how to use your money the right way. Click here!
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Posted on 21 May 2024
in Superyacht Crew Finances
