Risk Profile Score

Welcome to the Risk Profile Score Calculator!

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The general definition of risk tolerance, which is crucial in investing, pertains to 'the level of risk an investor feels comfortable assuming or the extent of fluctuation in investment returns an individual is willing to endure.' Which of the following most accurately characterizes your current life stage?

What is your main motivation for allocating your funds to investments?

To what extent can you rely on your present and future income derived from your salary, pensions, or other investments?

How would you assess your net worth, which includes all assets except your primary residence, minus any outstanding liabilities?

How familiar would you say you are with investment-related topics?

To potentially earn returns greater than typical bank interest rates, you may need to include investments that exhibit fluctuations in value, also known as volatility. How do you prioritize safeguarding your investment and reducing the likelihood of its decline in value?

How much do you depend on the income produced by the portfolio to satisfy your financial requirements?

If you depend on this income, what annual income amount do you expect?

For how long do you plan to keep your capital invested before you foresee needing to use it? (Assume you have already established arrangements to address short-term cash needs and emergencies.)

When evaluating your investments and making investment choices, do you take into account the potential for either losses or gains?

Assume you had an initial investment portfolio valued at $100,000.

If, because of market conditions, your portfolio declined to $85,000, what would you do? (Assume you've experienced such a decline, and select the response that aligns with your actual behavior.)

Most portfolios experience some level of return volatility, which is influenced by the portfolio's exposure to growth assets. The higher the exposure to growth assets, the greater the potential for both returns and losses. Among the following portfolios, which one would you find most comfortable in terms of the trade-off between the risk of losses and the potential for returns?

Considering your response to the previous question, which of the following statements most accurately reflects your approach to selecting actual investments?

Are there any exceptional circumstances to take into account? This could include situations such as divorce, widowhood, or the responsibility of caring for grandchildren, among others.

Do you have any particular anticipations regarding the returns on your investments? This could include expectations related to index performance, returns surpassing cash yields, or specific percentage targets.

Considering the portfolio traits mentioned below and the estimated data comparing risk and return, which profile from the graph below do you believe aligns most closely with your investment goals? Using this graph, please choose the corresponding plot point from the list below that best reflects your comfort level concerning the trade-off between risk and return for your investments. While risk tolerance assesses an investor's comfort with investment risk, risk capacity focuses on the level of risk an investor needs to assume to achieve their financial objectives. This entails evaluating the potential returns associated with different investments and the timeframes involved. It's crucial to note that risk capacity is equally significant as risk tolerance when it comes to guiding your advisor in determining suitable investment strategies and making recommendations.

Behaviour of asset classes

This table illustrates that defensive assets, like cash and fixed interest, can offer reasonable income depending on the prevailing interest rates, but they lack growth potential, making them generally lower-risk investments. Conversely, shares have a greater potential for capital growth, which also increases their risk profile.

This information highlights the connection between risk and returns. In essence, you cannot anticipate higher returns without accepting higher risk, and conversely, you cannot expect safety without accepting lower returns.


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