Risk Averse

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DEFINITION of 'Risk Averse'

A description of an investor who, when faced with two investments with a similar expected return (but different risks), will prefer the one with the lower risk.

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BREAKING DOWN 'Risk Averse'

A risk-averse investor dislikes risk, and therefore will stay away from adding high-risk stocks or investments to their portfolio and in turn will often lose out on higher rates of return. Investors looking for "safer" investments will generally stick to index funds and government bonds, which generally have lower returns.

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