Ask any investor what is her main fear while investing and her response will point towards the fear of losing money. In other words, investors fear the risk of investment, which is the likelihood of not getting returns on the principal amount invested, or even the principal amount itself.

While investors can vary in their appetite for risk while investing, many investors are not able to assess their own risk-taking ability, which is crucial for sound financial planning. The more risk you can take on, the more risk-seeking you are as an investor. In this case, you are more likely to suffer a loss, but you are also more likely to get higher returns, as risk and return go hand in hand. Conversely, the lower risk you are willing to take, the more risk averse you are, and the returns will accordingly be lower.

Read the full article published originally on Financial Express: Are you a risk-averse investor? Here’s a check-list