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  • Wendell Brock

What Does Your Risk Profile Say About You?


In working to serve clients better, I use a tool to gain insights into preferences and tolerances people have towards investing. A Risk Profile Assessment tool helps me understand your ability and disposition towards taking on financial or market risks. It aids in determining the proper investments or portfolios to invest in; it helps align investors with the appropriate risk level associated with their personal goals.



The easiest way to discover your risk profile is through a Risk Profile Assessment, like the one you can find on Yieldfa.com. It’s like a financial personality quiz that reveals a person's ability or willingness to take on risks. It consists of questions that measure your attitude and understanding of financial markets. It also helps gauge how you might react to certain investment scenarios. Your calculated responses determine your risk level. The results are used to develop a portfolio. 

Typically, there are five types of investors. Your Risk Profile Assessment score will determine which type of investor you are. 

Conservative

Conservative investor’s focus is on protecting principal instead of seeking higher returns. They are comfortable accepting lower returns for a higher level of security and more liquidity of their investments. Overall, a conservative investor minimizes risk of loss.

Moderate-Conservative

Moderate-conservative investor’s objective is principal preservation but is comfortable accepting a small degree of risk to seek some degree of appreciation. This investor is willing to accept lower returns, and is willing to accept minimal losses.

Moderate

Moderate investor permits some risks in an effort to enhance returns. They are prepared to accept modest risks to seek higher long-term returns. A moderate investor can endure a short-term loss for the trade-off of long-term appreciation.

Moderate-Aggressive

Moderate-aggressive investor places a higher value on long-term returns and is willing to accept significant risk. This investor believes higher long-term returns are more important than protecting principal, and may endure large losses in favor of potentially higher long-term returns. 

Aggressive

Aggressive investor prizes profitability and is willing to accept substantial risk. This investor believes maximizing long-term returns is more important than protecting principal. An Aggressive investor may endure extensive volatility and significant losses.

Because people change over time, it is important the risk assessment is updated on a regular basis. If it has been a year or more since you have completed one, I highly encourage you to take our risk assessment on our website, www.yieldfa.com (scroll down a tad to find the assessment). Knowing your risk tolerance gives us, as we work together, an understanding of what’s important to you as an investor, and will help in reaching your overall goals.



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