DIY (Do IT Yourself): you will have to make a note of your own behaviour and sentiment when markets go up or down. And then do analysis come to the conclusion.
Professional: You should contact your Financial Advisor/Planner so that no blind spots are there.
Note: Risk profiling depends on number of factors like demographic, financial goals, what is your relationship with money when you were child, teenager & adult, your current nature income etc.
To me, risk (what you undertake on your money) is defined by the need, by your future goals. If majority of your goals are short (occuring between 0 to 2 years) and medium term (arising between 2 to 7 years) then for these goals you should invest in liquid/ ultra short term funds (for short term goals) and for long term goals (due after an excess of 7 years) invest in diversified equity mutual funds.
Based on your investments, if your majority investments (depending on your future needs/goals) are in the short and medium term category, you are a conservative investor. And, if your majority investments are in long term assets you are an aggressive investor.
In order to ascertain your risk appetite, you should consider various situations and your reponse to those situations. e.g. if you are considering an investment where there are chances of losing your principal amount partially and at the same time there is also a likelihood of gaining substantial returns , your comfort of taking this risk defines your risk appetite. Risk appetite is also associated with your income levels, occupation and several other behavioral factors. However, more important is that the investor should clearly know the risks associated before making investment decisions because most investment accidents happen due to limited knowledge of risk return profile of an instrument.
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