What is a Risk Profile and why is it so important?

Many Australians invest blindly. Often we are set up with a super fund by our employers and never think twice on it. At that time, the super fund will place your funds into a default investment, which today is often a ‘My Super’ option, which invests in an allocation that is generalised based on your age group.

Often this isn’t even the right investment choice for you.

A risk profile is a method of determining how much risk you are willing to take with your investments. It considers how long you have to invest, whether you’ll need access to the funds in the short, medium or long term, what your tolerance is to volatility (i.e. how soon your balance falling will start to worry you), what your realistic goal is for returns, what investments you are comfortable to invest in and what other investing you have done in the past.

It is an important exercise to ensure that the investments you have made are working in a way that suits you. The results of risk profiling often helps people to pass the sleep test – if your investment returns are keeping you up at night, you’re probably not invested in a way that’s right for you.

At Yield we can help you undertake a risk profiling exercise and determine an appropriate investment mix for you, ensuring you’ll be able to pass the sleep test!
 

 

GENERAL DISCLAIMER:

The content of this presentation is intended to be general information only and has been prepared without taking into account any person’s objectives, financial situation or needs. Each person should consider its appropriateness having regard to these matters or obtain relevant professional financial advice before making any financial decisions.  Examples are illustrative only. Each person should obtain any relevant professional financial, taxation and social security advice before making any financial decisions.