RISK ASSESSMENT
Risk Number
As an investor, are you able to clearly define your risk tolerance? If your answer is no, then find out your risk number.
What is risk tolerance? Risk tolerance is a measure of willingness and ability to accept a higher level of risk or volatility in exchange for the potential to gain higher returns.
It is not a factor that is static. Risk tolerance is likely to change with age, income, and other important life events, such as retirement.
Risk tolerance is an important component in investing and financial planning. You should have a realistic understanding of your ability and willingness to stomach large changes in the value of your investments based on your specific risk tolerance; if you take on too much risk, you might panic and sell at the wrong time.
How much risk are you taking today?
Most people don’t know exactly how much risk is in their existing portfolio. We can review your current investment lineup, calculate its risk number and compare it to your personal risk number. Often, we find a significant difference between the amount you are willing to risk and the amount of risk you are actually taking.
Align your portfolio with your risk number
Armed with these two numbers we can easily provide some action steps to bring your portfolio into alignment with your risk profile. Once we know the amount you are willing to risk we can provide you with a reasonable estimate of the gains you might expect in your portfolio over time. In other words, we can help you design an investment portfolio with a range of potential gains and losses over time that is within your comfort zone.