What should I consider to ascertain my risk appetite? How do I know if I am a conservative investor or an aggressive investor?

The best way for anyone to know is what will you do when a fund you have invested turns negative. Will you invest more ? Stay invested ? Or redeem ? Risk taking ability also depends on various factors like Age, Income sources, Dependents, Other investment done already. So it depends on each individual.

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.


All the data/information shared above are opinions/ views that solely belong to the Mutual Fund Distributors. UTI Mutual Fund (acting through UTI Trustee Company Pvt Limited) / UTI Asset Management Company) owes no responsibility/ liability whatsoever in this regards. The information contained should not be construed as forecast or promise, and the only objective of this initiative is to educate the consumers to take a more informed investment decision. Any investment decision taken based on the information provided in the content above shall be at sole risks, cost and consequences of the user.



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