Risk Seeking

Loading the player...

What does 'Risk Seeking' mean

Risk seeking is the search for greater volatility and uncertainty in investments in exchange for anticipated higher returns. Risk seekers might pursue investments such as small-cap stocks and international stocks, preferring growth investments over value investments.That being said, risk-seeking investors should conduct even greater due diligence when considering a riskier investment, due to the increased implied risk of such investments.

BREAKING DOWN 'Risk Seeking'

Risk seeking might also describe an entrepreneur who is willing to give up the stability of salaried employment with another company to start his or her own company in the hope of a greater financial and/or emotional payoff. A risk tolerant investor, on the other hand, might seek more of a balance between risk and stability by including more value stocks and fixed income securities in his or her portfolio; a risk averse investor would focus mainly on investments with slow but steady returns.

RELATED TERMS
  1. Risk

    The chance that an investment's actual return will be different ...
  2. Risk Lover

    An investor who is willing to take on additional risk for an ...
  3. Risk Tolerance

    The degree of variability in investment returns that an individual ...
  4. Risk Averse

    A description of an investor who, when faced with two investments ...
  5. Return Of Capital

    A return from an investment that is not considered income. The ...
  6. Country Risk

    A collection of risks associated with investing in a foreign ...
Related Articles
  1. Fundamental Analysis

    How To Construct A High-Risk Portfolio

    Over time, intelligent and disciplined risk-seeking behavior can produce substantially above-average returns.
  2. Investing Basics

    Understanding Risk Averse Investing

    Risk averse describes a low level of risk an investor is willing to accept on his investments. An investor who is risk averse prefers little risk and is willing to accept a lower return because ...
  3. Investing Basics

    Determining Risk And The Risk Pyramid

    Many investors do not understand how to determine the risk level their individual portfolios should bear.
  4. Financial Advisors

    When Couples Have Different Risk Appetites

    Communication, compromise and frequent monitoring will lead to successful investing for spouses with different risk tolerances.
  5. Professionals

    The Risk Premium

    CFA Level 1 - The Risk Premium. This topic covers risk premium, which is a component of required rate of return. Examines business, financial, liquidity and political risk.
  6. Professionals

    Risk And Returns

    We define the different types of risk and see how they influence investment returns.
  7. Professionals

    Portfolios

    Find out how portfolios are constructed and how to evaluate their performance.
  8. Savings

    Teaching Financial Literacy To Teens: Investing

    Many teens are interested in learning about investing, including investment types, risk management and fundamental and technical analysis.
  9. Options & Futures

    Risk Tolerance Only Tells Half The Story

    Just because you're willing to accept a risk, doesn't mean you always should.
  10. Active Trading

    Value Investing: Common Alternatives To Value Investing

    There are dramatic differences in the ways different types of investors make their investment decisions. In this section, we'll look at some of the most common investment philosophies and ...
RELATED FAQS
  1. What are some of the limitations of only looking at the rate of return for an investment?

    Learn why only reviewing the rate of return for an investment poses a risk to the investor and what additional factors should ... Read Answer >>
  2. Is there a positive correlation between risk and return?

    Learn about the positive correlation between risk and the potential for return, and understand how risk is used to construct ... Read Answer >>
  3. How do I find out my own risk tolerance?

    Learn why risking capital can be risky business, how much risk can you afford and how to determine the right amount of risk ... Read Answer >>
  4. How do the risks of large cap stocks differ from the risks of small cap stocks?

    Understand the important differences between large- and small-cap companies that make small-cap firms a more risky equity ... Read Answer >>
  5. What are the components of the risk premium for investments?

    The risk premium is the excess return above the risk-free rate that investors require as compensation for the higher uncertainty ... Read Answer >>
  6. How can I use risk return tradeoff to determine my risk tolerance and investment ...

    Learn how an investor can use the risk-return tradeoff to determine what assets to include in a portfolio, and understand ... Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center