We will only ever recommend investments that match your risk profile, and for us this has 3 elements:
· your need to take risk,
· your ability to take risk and
· your willingness to take risk.
This is important as the investment journey should be a long one and we need to make sure that you will be comfortable with it. Using the analogy of a roller coaster ride, you want to make sure that you can take the ups and downs that come with that particular roller coaster, as it will be too late once you are on it.
Need to take risk
We invest so that you will have enough returns to meet your goals. We do not try to give you maximum market returns as it means taking unnecessary risks, you might then get uncomfortable and bail out too early. So with our financial planning hat on we will know your need for return and thus, your need to take risk.
So bigger goals might need a bigger return to get there.
Ability to take risk
We will examine your financial health, your investment time horizon and the adequacy of your insurance coverage. All these will determine your ability to take risk.
For example, short term goals = lower ability to take risk
Willingness to take risk
And we use our risk profiling tool to understand how much risk you are willing to take.
It is only after understanding these 3 factors that we can accurately determine your overall comfort level for your investment journey with us.