So you’re looking to determine your risk profile? This is a critical step in ensuring your investment strategy aligns with both your personality and your financial capacity to handle market ups and downs. You can start your Risk Profile assessment in the app.
What is a risk profile?
A risk profile assesses two key things:
- Risk Tolerance: How you feel about taking risks with your money.
- Risk Capacity: How much risk you can afford to take based on your financial situation and timeframe.
How to complete the assessment
- Navigate to the Risk Profile form.
- Answer Honestly: There are no right or wrong answers. The goal is to get an accurate reflection of your comfort level.
- Consider your history: Think about how you’ve reacted to market drops in the past.
- Review your results: Once finished, your result will typically fall into a category like “Conservative,” “Balanced,” or “Growth.”
Why it matters
Your risk profile result helps your adviser recommend an appropriate mix of assets (like shares, property, and cash). A “Growth” investor might have more in shares, while a “Conservative” investor might have more in cash and bonds.
How to answer the questions
- Real behaviour matters: How you actually react in volatile markets is more important than how you think you’ll react.
- Use your real timeframe: A goal you want to reach in 2 years requires a different risk setting than a goal 20 years away.
- Be honest about stress: If a market drop would force you to sell your investments to pay bills, that’s a sign of lower risk capacity.