How do you decide between two risky investments?

weight out the pros and cons of each and ask for advice from someone above

I’d compare the two options based on risk, return, time horizon, and how they fit my goals. I’d also try to think ahead: what might happen if I choose one over the other? Anticipating potential outcomes helps reduce uncertainty. If I’m unsure, I’d seek input or stress-test my assumptions. It’s about making a thoughtful, not perfect, decision.

Rita

This is one of those personal fit questions that’s meant to probe how you think—not just what decision you’d make. They want to hear how you weigh trade-offs, how you deal with uncertainty, and whether you have a clear, structured thought process.

Here’s how I’d approach it in an interview setting:

“If I’m deciding between two risky investments, I start by asking: risky in what way? Is the risk about volatility, downside potential, uncertainty around key assumptions, or maybe execution risk? Getting clear on the nature of the risk helps me frame the decision more clearly.

Once I understand that, I’d look at three things: expected return, downside protection, and how much conviction I can build in the key assumptions. So for example, one investment might have higher return potential but rely heavily on aggressive growth assumptions. The other might be more conservative but backed by stronger fundamentals or a clearer path to value creation.

In that case, I’d ask: which assumptions can I diligence? Where do I have an edge in understanding the risk? And which one would I still be comfortable holding if things don’t go perfectly? I don’t mind risk if I understand it well and can defend the bet logically.

To be honest, I’d also consider the context—what’s the broader portfolio or strategic objective? If I’m making this decision as part of a team or firm, alignment with the overall strategy matters too.”

You can ground this with a real example if you have one—like choosing between two internships, two case paths in a competition, or two business ideas with trade-offs. That gives you more credibility and makes your answer stick.

When asked “How do you decide between two risky investments?” in a Personal Fit interview, it’s important to show a thoughtful and structured approach to decision-making under uncertainty. 

I would explain that I start by gathering as much relevant information as possible about both options, including potential returns, risks, and market conditions. Then, I weigh the risks against the expected rewards, considering not just the numbers but also factors like timing, alignment with long-term goals, and the broader context. I’d also mention the importance of scenario analysis and stress testing to understand how each investment might perform under different outcomes. 

Finally, I would emphasize the role of intuition and judgment built on experience, while being ready to adapt or cut losses if things don’t go as planned. Sharing a real example where I balanced risk and made a tough choice would help demonstrate this mindset clearly.