Who is a Risk Averse Person?

Risk Averse Person

Averse means “differing from or strongly opposed to”. So, an investor who is risk averse stays away from risks or prefers the one with low risk even though it offers less returns on investment.

Consider a situation where a risk averse person has to invest between the two available options; one with guaranteed but lower return on investment, the other with a fifty percent chance of higher return on investment and fifty percent chance of no return at all (betting). So, he chooses the one with low risk i.e. the first option.

Where and Where not to invest?

The basic place to invest for these kind of people is banks savings account, provident funds,.state and central governments securities and bonds usually called G-secs in order to absorb extra liquidity in the market. G-secs are also a good place to invest since they also bear zero risk. (They may even offer floating interest rates and have also had minimum and max requirements to invest). A Risk Averse person will stay away from shares, equity mutual funds, ponzi schemes and betting.

A thorough enquiry with investment banker gives a great insight into risks in investment atmosphere.