Outlook Money
It is the aggregate of risks an individual is willing to take to achieve goals.
One can measure it in three parts: risk required, risk capacity, and risk tolerance.
Risk appetite does not remain constant; it changes with time.
Risk appetite is the outcome of many factors.
Age can be a vital factor that can influence your risk appetite.
A person from a sound financial background would be more willing to take risks than someone without financial security.
Consistent cash flow for life can turn a person from a moderate to aggressive investor. Conversely, fear of losing savings or having no income source in old age can turn people risk-averse.
If there are family responsibilities, one would not be willing to make random investments and put everyone at risk.
Personal traits, conditioning, and psychological factors can also influence risk appetite.