Risk Lover

DEFINITION of 'Risk Lover'

An investor who is willing to take on additional risk for an investment that has a relatively low expected return. This contrasts with the typical investor mentality - risk aversion. Risk averse investors tend to take on increased risks only if they are warranted by the potential for higher returns.

BREAKING DOWN 'Risk Lover'

There is always a risk/return tradeoff in investing. Lower returns are usually associated with lower risk investments. Higher potential returns are associated with investments of higher risk, as most investors expect to be compensated for taking on additional risk. Risk lovers, however, go against this principle: they acquire investments of higher risk with a lower expected return.

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