A risk averse investor is one who chooses the preservation of capital over the potential for a higher than normal return. He prefers a conservative investment that grows slowly but surely over time. Typically , he would invest in savings account, fixed deposits, bonds, mutual funds and dividend stocks.
Retirees and old investors are usually known to be risk averse. They fear loss of their retirement fund judiciously accumulated over the decades.
A risk friendly investor would choose the higher than normal return over the preservation of capital. He aims for large and quick profit at the risk of the loss of his capital. He may mitigate his risk of loss by being risk diverse.
Investors in cryptocurrencies are certainly a risk friendly lot. Other risk friendly investments are equities (esp. volatile stocks and penny stocks) other than dividend stocks, foreign exchange, hedge funds and private company investments.
Being risk diverse is a choice open to both the risk averse and risk friendly investor. It is a kind of buffer insurance that reduces the risk.
Which category do you belong to and why?