November 23rd, 2009
11:48 AM GMT
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We’ve all heard the old tale that if you invested $10,000 in Microsoft when the company went public in 1986, today you’d be a multi-millionaire. We think back to when oil was trading at $30 a barrel, and ask ourselves why we didn’t get into the action. Or, look at the price of gold. Why didn’t I invest a bit just a few weeks back? We kick ourselves.

But actually making these investments is of course easier said than done. Because when we’re faced with investment decisions, it’s not that simple. People are comfortable with different levels of risk. And finding out where you stand within that spectrum can be challenging.

On this week’s Biz Clinic, we sampled a series of these tests designed to gauge your stomach for risk.

The following are some from a test put together by professor at Rutgers University:

In general, how would your best friend describe you as a risk taker?

  1. A real gambler
  2. Willing to take risks after completing adequate research
  3. Cautious
  4. A real risk avoider

You are on a TV game show and can choose one of the following. Which would you take?

  1. $1,000 in cash
  2. A 50% chance at winning $5,000
  3. A 25% chance at winning $10,000
  4. A 5% chance at winning $100,000

When you think of the word "risk" which of the following words comes to mind first?

  1. Loss
  2. Uncertainty
  3. Opportunity
  4. Thrill.

Take the full test if you want to get a clear picture of your appetite for risk.

While I was skeptical, the tests can be helpful. One independent consumer survey broke down a possible investment strategy for me. Another suggested a mix of aggressive mutual funds, with bonds. I was told I had a “moderate risk tolerance.”

They helped put my level of risk in perspective. And they got me thinking of another question you might ponder:

A Harvard-dropout has started a relatively new company that could revolutionize the way people use personal computers. You could make millions in the long run. But right now, he needs $10,000. Would you fork over the cash?

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Filed under: Biz ClinicFinancial markets

soundoff (3 Responses)
  1. Kári Steinsson

    I would support that and try too find invester´s but i´d need to know more.
    Best regards Kári

    November 28, 2009 at 12:15 am |
  2. Chukwudi Oje

    This is really interesting. I have been thinking about this whole risk taking thing lately and i would love to share my personal story. I share this story both out of pride and frustration. I am proud because i have done what most people can't even imagine, but frustrated because i have come face-to-face with the reality of how this wonderful system can also destroy a great vision.

    I emigrated to the United States of America from Nigeria in September of 2007(a little over two years), and having worked in logistics industry back in Africa, i quickly identified business opportunities in the Los Angeles area where i live. Less than a month after i arrived here, i started my business-Pretty Logical International LLC. The company was formally registered in January of 2008 and in the first year, made over $250,000.00 in revenue. We have not even come to the end of the second year, and it is obvious we have already surpassed last year revenue figures. It gives me joy and pride to see what i imagined become reality within such a short time. We now employ other Americans and have multiple locations.

    I tried to source funds for expansion early this year,but was not successful. I imagined that anyone seeing what we have done in less than two years would be interested in helping us build this business which has potentials of becoming a multi-million dollar business. I have decided to wait till we have the full records of our 2009 operations, then i will go back into the market to source funds and i am convinced that someone out there will be smart enough to cast their lot with me and grow this potential giant of a business.

    I took risks that when people hear it, they think i am mad, but that is the way things get done.Imagine starting a business within a month in a strange land,a few weeks after your first child is born, without any part time job or alternative source of income, and you may begin to understand what i am talking about. Within 9 months of registering the business, we already had a second location in the United States and have also recently developed a network that enables us to get business from outside Los Angeles and infact California.

    I love taking calculated risks. My opinion is that not everyone is wired to take risks, especially when the stakes are high.

    December 11, 2009 at 7:44 am |
  3. tansahthomas

    Ecobank Group has announced that it has reached an agreement with Advanced Finance & Investment Group for an investment of US$14 million in three of its subsidiaries.

    May 15, 2012 at 5:10 pm |

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