Before going into matters in greater detail, it is important for you to check now that you know your own attitude to risk, to taking risks and to living with risks if others take them on your behalf. This is a knotty area and an important one.
Surprisingly little has been said about it when salesmen or women set out to try to persuade you to buy this or that type of savings or investments, or to embark upon a new course of action in life or even when you take a job. Risk is fundamental to all decisions we have to take and if you are unsure about your own attitude to risk then you could be putting a lot that is important to you at risk. It is important, too, to recognize that there are many and different sorts of risks.
In addition to risks in relation to finance there are, of course, risks affecting the choice of job, school, husband or partner, the type of home and area in which to live, the maker of car to buy or rent and so on. Each and every one of these risks has implications in terms of finance.
So how do you define risk, and how do you determine your own attitude to it? And having gone through that exercise, how should you relate it to money? Do you know where you stand? If not, can you find out?
For example, assuming you have a good cushion of savings in a safe place like a bank or building society, how would you feel if some shares you'd bought halved in value? Would you hang on to them on the assumption that they would' probably go up again?
Or would you sell them and chalk it up to experience, finding out as best you could just why they went down? Or would you be so distraught that you wouldn't know what to do for the best?