Income Variation
Self-employed people need a bigger buffer to meet a financial emergency. However, someone with regular income can go for investments that are risky in short term.Liabilities
If you have financial commitments such as a home loan you can’t take big risks. Ideally, the debt repayment should not be more than 50% of income.
Dependency
The number of dependents also decides the risk profile. If the person is the sole breadwinner for an extended family, his risk appetite will be very low.
Age factor
The number of working years left decides your ability to take risks. In case of a downturn, younger people can afford to wait till the investment bounces back.
Your Industry
Industry in which a person works determines the stability of the income and hence, his ability to take risks.
Investments in the past
If you have been a regular and disciplined saver and have accumulated enough, it acts as a cushion and allows you to take higher risks.
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