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What’s Your Risk Tolerance?

Posted on 20 December 2013 by Andrei

One of the biggest mistakes domainers make is thinking that there’s a “one size fits all” solution just waiting for them.

What they should be doing is asking themselves what the best strategy for their specific situation is. An approach that’s great for a beginner who wants to learn the ropes and doesn’t mind investing time as well might not be the best choice for let’s say an offline business owner who wants to add some diversity to his portfolio by investing in domains as well.

There are lots of factors based on which you can figure out where to start.

One of the most important ones is, without a doubt, your risk tolerance.

If you want to play it safe then sure, there are “blue chip domains” just like there are blue chip stocks. For example short domains such as LLL dot coms and NNN dot coms. They’re highly liquid, for the most part less susceptible to huge price fluctuations but on the other hand, there’s less upside than with other types of domains.

If you want higher potential rewards and are willing to accept a higher risk factor then sure, the sky is the limit. The higher the potential rewards are, the riskier the asset in question is.

Again, start by asking yourself what your risk tolerance is.

Domainers have all sorts of goals. Some of them want to make a lot of money as quickly as possible, while others aren’t necessarily chasing an impressive ROI and are willing to make certain sacrifices in that respect in exchange for additional safety.

You are in the best possible position to figure out which approach makes more sense in your case. Sure, you can ask other people for advice but at the end of the day, nobody is in a better position than the person you’re looking at in the mirror each day to determine what the best course of action is.

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