Risk Profiling refers to the evaluation of an individual ability to take risks. It assists in making the risk profile of the investor.
As psyche of every person differs from others.
People can be classified as:-
Risk-Averse -Don't want to take up the risk.
Risk seeker- Is one who is willing to accept greater financial risk in exchange for more profits.
Risk Neutral- These people are neither risk seekers nor averse.
Due to it, new investors can plan their investments by knowing where they stand and what is right for them Mutual Funds, Shares, or Crypto.
Some other benefits -
•It helps in taking the right risk as per requirements and capacity.
•Bring the right investment opportunities to light, so a balance of risk and reward can be achieved.
•Help to identify psychological reactions to unexpected fluctuation in the market.
•Plan for the worst-case scenario.
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