Historically, the share market has experienced rapid rises and falls in value. What do you think you would do if your investment experienced a fall by as much as 30% in value in a very short period of time such as a year or less?
A. Sell the investment immediately
B. Reduce holdings in the investment to limit any loss
C. Do nothing
D. Buy more of the investment
E. Borrow money to buy more of the investment
How you respond tells us something about how you feel about investment risk – ranging from a conservative investor (low tolerance to risk) to an aggressive investor (higher tolerance).
How much investment risk you are prepared to accept will impact on the types of investments you choose. But remember, higher returns usually mean higher risk.
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