1. Life cycle risk
In fact, the amount of risk that will be acceptable will vary with the stage of the life cycle.
Examples:
a) A young person with no dependents will have a higher risk level than a middle-age person with a family.
b) A retired couple requiring income to finance their life style every month tend to be more conservative than middle age people with a family.
2. Employment risk
Government employees have more income security than someone self-employed, someone working in a service industry that often lays off workers, or seasonal workers. It is wise to balance your risk if you doubt your job security, you may consider putting some savings in very low-risk debt securities in case of lay off.
3. Diversify your investments
Diversification is a basic principle in portfolio management that helps to reduce total ris
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