Know Your Risk Profile
Understanding your risk profile is essential for creating an investment strategy that matches your comfort level and financial goals.
What is a Risk Profile?
Your risk profile combines two key factors:
- Risk Capacity: Your financial ability to withstand losses
- Risk Tolerance: Your emotional comfort with market fluctuations
Common Risk Profiles
Conservative
- Prioritizes capital preservation
- Minimal tolerance for losses
- Typically includes more bonds and cash equivalents
Moderate
- Balances growth with stability
- Accepts some short-term volatility
- Mix of stocks and bonds
Aggressive
- Focuses on maximum growth potential
- Comfortable with significant volatility
- Higher allocation to stocks and growth investments
Factors That Determine Your Profile
Your risk profile may change over time as your circumstances evolve.
- Time Horizon: Years until you need the funds
- Financial Goals: What you're investing for
- Current Financial Situation: Income, expenses, and existing assets
- Investment Experience: Your comfort with different asset classes
How We Assess Your Risk Profile
1 Complete our risk assessment questionnaire
2 Discuss results with your wealth advisor
3 Review and confirm your investment strategy
Remember: Be honest about your risk tolerance. It's better to have a conservative portfolio you can stick with than an aggressive one that causes you to panic during market downturns.