High risk investment strategies

I’m not a high-risk person. I don’t like heights, am frightened of pain and carry sunscreen with me to avert sunburning potential on my wholly inappropriately pale skin. I don’t speed or drink drive or forget my seatbelt. I have never been involved in an extreme sport, and the appeal of base jumping or swimming with sharks eludes me entirely.

I play it safe. The idea of high-risk investment is not one I readily engage with. I’m one of life’s plodders, happy to invest in something safe and slow. Which is probably why I find the world of high-risk investment an exciting one, especially when I’m a safe distance from it.

High yield investment programs (or HIYP) is the term used to entice you into this crazy world. Note the replacement of the word ‘risk’ with ‘yield’. This is the other side of the coin; risk a lot and you stand a lot to gain. The name of the game is research- if you are uninformed about your choices, or risk more than you can stand to lose, you will invariably find yourself in a sticky situation sooner or later. You might gain a lot to begin with, but chances are you will risk that too and stand to lose that as well. If you’ve got the soul of a gambler, at least make sure you’re a well-educated one. Understand the market, talk to people about what’s set to go up (or, more importantly, down) and invest accordingly.

First and foremost, you need to decide is what your goal is from this whole escapade. Know what your target return is, and how much are you willing to risk. How much financial fat do you have to play with? If it’s contingent on continuing employment or you’re dipping into a house deposit to risk on high yield investment programs, rent a couple of Depression-era films and remind yourself of what the reality can be like.

Ask around and find yourself an advisor who you can trust. Don’t let yourself be talked into Eddie’s deal that’s a sure thing because he knows a guy who knows a guy and stands to make a profit from your involvement. Just like the Nigerian email, if it looks too good to be true, it probably is.

‘Know Your Money’ suggests it’s also a good idea to get a solicitor to look over the deal before any money changes hands. They’ll hopefully be able to spot a financial black hole, even if you’ve missed it.

It’s not for me, the world of high risk. It doesn’t appear to be much to the taste of a lot of finance writers either; having lived through the dot.com boom and bust, the idealism of risking everything on a program that turns out to be the next Facebook is slim to none. But that’s just me. If I took the investment personality quiz, my response would be ‘so boring and financially conservative, you may as well be dead’. Why not take it yourself and find out what investment style suits you? Just be warned; if, after your results reveal you a demon for risk, you are offered a Sure Thing With No Strings Attached, don’t believe them. Buy a racehorse instead At least then you get to wear pretty clothes every Saturday.

Are you a high risk investor?

What tips would you suggest for those about to start out investing?

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