1. Choosing to buy insurance for your home, car, or health to protect against the financial impact of unexpected events.
2. Preferring to invest in low-risk, stable assets such as government bonds or savings accounts rather than high-risk, volatile investments like stocks or cryptocurrencies.
3. Deciding to save money in an emergency fund instead of spending it on non-essential items to have a financial safety net in case of sudden expenses.
4. Opting for a fixed-rate mortgage over an adjustable-rate mortgage to have predictable monthly payments and avoid the risk of increased interest rates in the future.
5. Selecting a job with a stable salary and benefits over a commission-based or freelance position with fluctuating income.
Risk aversion simple examples
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