Personal Risk Profile Essay Example | Topics and Well Written Essays - 750 words

Personal fortune Profile - Essay ExampleAs a neutral investor, from the investment choices, I would like to select bank deposit i.e. term deposit in term deposit where I can get 6% interest on my investment annually and requires only $ 25000 as a minimum deposit and having only 2 years locking point. The term deposit gives safety too assuring a consistent return. After the 2 years, I can withdraw the money at any time which means the liquidity of fund. If I have $500000 in my hand by depositing the cash in the bank as a fixed deposit I will get 6% interest on the deposit which is 500000 * 6 / 100 = 30000. Investing money in the bank account as a fixed deposit would alter me to earn an interest of $ 30000. In the bank account, cash management is also a good choice because it provides an interest rate of 6.4% annually and it requires a lock-in period of only two years. The minimum deposit begins at $ 10000. Bank deposit is thus a safer and reliable investment compared to corporate bond and investment in shares. As a neutral investor, I am not willing to take many risks and I am seeking a safer investment area. Investments in shares are riskier even if it provides a good return. However, such investments are subject to several factors. There is also a high possibility of sustaining losses when the grocery crashes for some or other reason. The market conditions remain very volatile. On the other hand, if I invest in bank deposits, there is a fitting guarantee of the return though it is comparatively less. Thus, as a risk-neutral investor, I will choose bank deposit as my preferred method of investment. Risk aversion connotes to an investors attitude in an investment option where he prefers lower risk area. A risk-averse investor dislikes risk and therefore will stay away from adding high-risk stocks or investments to their portfolio and in turn will often lose out on higher rates of return. Investors looking for safer investments will generally bandage to i ndex funds and government bonds, which generally have lower returns (Risk Averse, 2011, para. 2).