What is your Investment

Risk Appetite?
Know Thyself| Know Thine Investments

Nnamdi Azodo
nnamdi.azodo@gmail.com
www.azodo.ng
Twitter: @SimplyAzodo
Investment is capital at risk!
 Rules of Investing

There are two Rules of Investing:

Rule 1: Never Lose Money

Rule 2: Never Forget Rule 1

~ Warren Buffett
 Know thyself.

Know thine investment.

 What is Risk?

Risk, is the possibility of loss, or other unwelcome circumstance.

The true nature of risk means that an element of uncertainty is

involved.

It could go either way!

 What Affects My Risk Appetite?
Your Risk Appetite or Risk Profile is, naturally, affected by many different things but here are some of the key
ones.

Factors Remarks

Age Typically, younger investors tend to take on more risks. There are more under 45
years trading cryptocurrencies than 75 years & above

Life Stage Unmarried people are more likely to take on more risks, the reverse is the case for
married and elderly people

Financial Goals Ones financial goals affects his/her risk appetite. For example, if I’m an 85 year old
retiree and my goal is to have enough to survive, I’m more likely to take
fewer/smaller risks
 Question

Which would you prefer:

N200,000 in cash right now!

Or

a 50% chance to win N1,000,000?

What is Your Risk Appetite?
Broadly speaking, there are 3 types of risk appetites: Which one are
you?

● Conservative

● Moderate

● Aggressive

Note:
1. No one person is purely made up of one risk appetite

2. There are some subdivisions of risk appetite but focusing on these broad types is good enough
 Conservative
These are the guys that chose the N200,000 option from our last exercise.

They prefer safety of their capital over uncertain but potentially huge reward.

They are fine, as long as they don’t lose money. This does not mean that they don’t like
gaining money but they hate losing money much more than gaining it.

Some Suitable Investment Options:

● Treasury Bills
● Corporate Bonds
● Mutual Funds
● Fixed Deposits
etc.

Is this you?
 Moderate
These are the guys thought hardest about their options in our last exercise.

They prefer to balance* risks with rewards.

They are comfortable losing money as long as they are certain they have a higher chance
of making money.

Some Suitable Investment Options:

● Real Estates
● Stocks of Bluechip Companies

etc.

* there is no perfect balance

Is this you?
 Aggressive
These are the guys that chose the option of 50% chance of winning N1m instead of a
guaranteed N200k

They have a high tolerance for withstanding losses over a sustained period of time with the
hope of gaining more later

They are comfortable losing money as long as they are certain they have a higher chance
of making money.

Some Suitable Investment Options:

● Startup Equities
● Cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Dogecoin, etc.

etc.

Is this you?
 Ask Me Anything

nnamdi.azodo@gmail.com

www.azodo.ng

@SimplyAzodo
Thank You.