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Why Risk Appetite Matters in Investment?
A quick guide to help you align your investments with your comfort and goals
Your risk appetite defines how much market fluctuation you can tolerate while investing. It’s a personal measure that helps decide whether you should choose stable options like debt or growth-focused assets like equity. Aligning your risk profile ensures that your investments feel right—even during market ups and downs.
Understanding Risk Appetite
Your age, income stability, financial goals, and past investment experience shape your risk profile. A 25-year-old starting out may afford higher risk than someone nearing retirement. Knowing this helps avoid panic during market dips and keeps your strategy intact.
Investment Types Based on Risk
Low Risk:Â FDs, debt funds, bonds
Moderate Risk: Balanced funds, index funds
High Risk: Stocks, crypto, thematic funds
Pick your assets based on how much downside you're willing to accept in pursuit of higher gains.
Why It Affects Returns
If you overestimate your risk tolerance, you may exit early during volatility and lock in losses. If you underestimate it, you may miss higher returns. The right match leads to consistent investing and better long-term results.
TaxBuddy Insights
While filing taxes, knowing your risk category helps claim capital gains correctly. TaxBuddy tracks your investments and guides you on taxation for short-term or long-term gains automatically.
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