The Risk Pyramid

The Risk Pyramid

the risk pyramid

Here’s the risk pyramid showing you how risky is whatever you’re doing. Once you identify where you fit in the above then you can make a sub-pyramid of that particular thing and so on. Needless to say, the safest is at the bottom and the riskiest is at the top of the pyramid.
Key factors to keep in mind while selecting an investment/trading instrument are:
  • Time Horizon
  • Capital 
  • Risk/Reward factor

 The Bottom Line

Not every investor is created equally. whereas others like less risk, some investors like an even additional risk than those who have deeper pockets. This diversity ends up in the sweetness of the investment pyramid. The pyramid representing your portfolio ought to be custom to your risk preference.

It is necessary for investors to grasp the thought of risk and the way it applies to them. Creating knowledgeable investment choices entails not solely researching individual securities however conjointly understanding your finances and risk taking capacity. To induce an estimate of the securities suitable for some levels of risk taking capacity & to maximize returns, investors ought to have a thought of what proportion time and cash they need to take a position and therefore the returns they’re seeking.

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