#financialempowerment: Risk Tolerance in Finances
From young, I never really liked the roller coaster nor thrill rides. Due to peer pressure, I found myself on such rides more than once but each time not quite sure why I subjected myself to that kind of trauma! Perhaps you are like me, or perhaps you swing to the other end where you embrace the adrenaline that comes from the unknown/fear factor. Our ability to stomach risk will determine whether our brain activates the ‘fight or flight’ trigger in responding to a situation.
Other than gratification, risk tolerance style is a trait that differs amongst individuals. It explains why some of us are more inclined to insurance while others to risky exotic investments. There is no right or wrong, but knowing our style can ensure that we capitalise on what feels comfortable to us while taking action to compensate for potential blindspots.
Risk tolerance differs from risk appetite though.
Risk Appetite:
Considers one’s current life circumstances in determining the maximum exposure one can afford to have.
Risk Tolerance:
What one’s subconscious allows before the brain and body starts going into alert mode.
Additionally, your Gratification Style can also affect your finances, find out more here!
