Page 8 - A Canuck's Guide to Financial Literacy 2020
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Step 2 - Determine your Risk Appetite
As an investor, you have a plethora of investment solutions that you can put your money
into, such as stocks, mutual funds, real estate, exchange traded funds, GICs and more!
Each investment solution has a risk associated with it. The higher the risk, the higher the
potential return and vice versa. You have to ask yourself, how comfortable are you with
volatility and how far away is your goal? The further the goal, the more risk you could take
.
Risk Reward Spectrum
The amount of risk that you’re willing to take could depend on a number of factors
▪ Timeline to achieve your goal
▪ Your attitude towards risk
▪ When you’re planning to withdraw the funds
▪ How comfortable you are with volatility
▪ Your current debt levels
▪ Your job stability and sources of income
You will find more information about various types of risks that you might run into when
investing your funds throughout the book.
