Some days ago I was asked why risk is so different for women than it is for men.
The underlying hypothesis was that women do not take risks.
Women do not take risks. That is a completely wrong statement. We take risks all the time. Any human being takes risks every day. Just to give a very simple example:
What can be more risky and more rewarding than having a baby.
The difference between men and women when it comes to risk is how each one assesses it. Men are more inclined to take faster decisions, and I believe that is the reason why people believe they are more risk takers than women.
Women take their time. Look around. Ask questions. Go back to their first option. Make comparisons. Shop around. Is part of our nature. It doesn’t mean we are not risk takers.
In personal finances we are accustomed to be presented with risk scenarios. Either you are conservative, moderate, or aggressive.
If you decide you are conservative, just because as women, we want to feel some degree of security; we will be presented with a bond portfolio or capital protected notes. None of which could be a good choice depending on the economic cycle.
Basically our “risk label” defines how our investments will go.
I do not believe in these scenarios.
Risk will always be there in any investment you take, even the ones in a “conservative portfolio”
What we should look for is “to mitigate risk”.
The most important issue when investing is to “not lose big”
Forget about the risk scenarios. A good investment is such in which you will get an adequate return for the risk you are taking. But most importantly one in which your potential losses are under control.
For more about investing and risk take a look at this post:Don’t lose Big
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