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Strategic Investment Decisions: Maximising Returns Through Effective Risk Management Strategies

Writer's picture: Raj HayerRaj Hayer

Maximising Returns Through Effective Risk Management Strategies
DALL-E: Maximising Returns Through Effective Risk Management Strategies

Three core concepts to help mitigate risk


What is your risk profile?


And why does it matter?


Emotions drive our decisions, even when we think they don’t. They do. They are what we have learned, inherently in our makeup, what makes us believe in what we do, and ultimately, where we spend our time and energy. 


Money is also a very emotional subject for many of us–especially women. That is why understanding your risk profile is so important. 



If you are inherently risk averse, you should likely not invest in high-risk and volatile investments. Even if they will likely recover in value, you won’t wait! You will panic and sell at the lowest possible value, which ensures you lose the value. 


You are not alone. 


Let’s break it down into a few core concepts that can help you understand why your risk profile matters and how to feel at ease when you are ready to make those investment decisions. 


It was always gonna be a risky relationship 


Risk and return. You cannot have one without the other. There is no get-rich-quick scheme, only education and investment of time, energy, and money. 


Let’s break it down simply:


  • Low risk, low return, likely to have a guarantee of return

  • High risk, high return, no guarantee of receiving a return at all


The key to high risk is the same as entering a casino in Las Vegas. The rule I was taught (even though I have not gambled at a casino!) was only to bet what you can afford to lose.

Then, if you lose it, walk away. If you win, put the amount you started with back into your pocket and only risk the winnings moving forward! 


I honestly don’t know if that works or is true, but it seems it would take a lot of discipline. And so, too, does high-risk investment. 

For example: When Bitcoin dropped from over $50,000/coin to $15,000/coin in the span of a few months, many panicked and sold, dismayed they had even thought of buying into the currency.
However, risk-aware and risk-takers who were expecting volatility didn’t skip a beat. They didn’t check their accounts every day, and they just held on to the coin. Sure enough, it recovered and is, at the time of writing, over $70,000/coin.

So, risk can sometimes pay off, but the key here is to ensure it is an educated and informed risk and only on the money you can afford to lose. Understanding your investment portfolio options and what makes sense. 


Diversity does the world good


Enter the Diversified Portfolio. Diversification mitigates risk, simple as that. You can manage the overall risk by spreading investments across various investment assets. 

The key is understanding the risks involved, the market, the industry, and the evolving nature of the technology.


You can also do what I do: Speak to people in my network who know and trust them, cross-reference their advice with sources and advisors online, and build your own comfort with the topic. 


Diversification helps create long-term portfolio health and stability.



Scale exhibiting risk and return with a balanced and diversified portfolio
DALL-E: Scale exhibiting risk and return with a balanced and diversified portfolio

By spreading investments across various assets, industries, regions, resources, and currencies, you can reduce the impact of poor performance on the overall portfolio.

Having said that, if you are a risk taker, you will likely have a heavier percentage of your portfolio in riskier stocks, and if you are risk averse, it’s okay to minimise risky stock exposure. 


Investing inherently involves facing uncertainty with the hope of achieving financial gain. That’s why it is so important to make sure you choose a portfolio that works for you personally, and that aligns with your goals. 


Portfolio’s must always be personalised


By understanding your values and your personal risk tolerance and defining your goals and timelines for goals, you can be realistic about what your portfolio should look like. 


We all have different financial goals, such as saving for retirement, purchasing a home, or funding education. Understanding risk will enable you to build a portfolio that meets your goal without exposing you to the unnecessary risk of losing everything. 


By aligning to your risk profile, you can create psychological comfort and stop that panic selling during market downturns I mentioned earlier with Bitcoin! 


Last but not least, if you are investing in single stocks, doing this groundwork allows you to align investments with your risk profile and ethics! If you believe in sustainability, then consider how companies are run and their impact on society and the environment.


When it comes to investing, remember to:

  1. Understand your risk profile

  2. Conduct thorough research

  3. Create a diversified portfolio


You can’t avoid risk, so it is a matter of playing to your risk strengths and making educated decisions. 


Never forego peace of mind and balance for your investment journey.




Important Disclaimer: This content is for entertainment and educational purposes only. Nothing in the content materials shall be considered legal, financial, or actuarial advice. Raj Hayer is not liable or responsible for any actions, inaction, or direct or indirect result of your choices and actions. 


IN OTHER NEWS


  • 🌊 We have yearly retreats, find out more on our Retreats Page!

  • 🚀 Women and wealth event The Wayfinders Summit is taking place June 18-20, 2025 in Toulouse, France. Look forward to meeting you in person.

  • 💰I’m keen to hear from women with a story about their personal careers and wealth journey. Please email me at raj@tinybox.me if you want to be featured in the book.

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Q&A


  • In our Free Skool Community, Mayfly Motivation, you can learn more about life design, and ask me specific questions on the monthly Q&A live video call.

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