Risk Profiling
How often are you enticed by a product just based on its good rate of return? Probably most of the time. At this point, investors frequently fail to match their risk profile with the risk profile of the investment, investing in their money and later regretting it. Here is where risk profiling comes into effect. It assists you in determining the optimal level of risk you can accept. You can then choose your best investment option based on this.
A risk profile is an evaluation of an individual and institution of their willingness and ability to take risk.
Define Your Risk
There are various degrees of risk you can take while dealing with your funds such as:
✓
Low
✓
Low to Moderate
✓
Moderate
✓
Moderately High
✓
High
- Looking at the lower risk level, your funds can comprise of 100% money market instruments which will be highly liquid investment.
- For low to moderate level of risk, your funds can be invested in fixed income instruments having longer tenure.
- For moderate level of risk, your funds can have an allocation of 70% fixed income instruments and 30% equity investment, considering your risk tolerance.
- For moderately high level of risk, your funds can have an allocation of 50% fixed income investment and 50% equity investment.
- For High level of risk, your funds can be allocated to 100% equity considering your preference and risk tolerance.
Risk Profiling
How often are you enticed by a product just based on its good rate of return? Probably most of the time. At this point, investors frequently fail to match their risk profile with the risk profile of the investment, investing in their money and later regretting it. Here is where risk profiling comes into effect. It assists you in determining the optimal level of risk you can accept. You can then choose your best investment option based on this.
A risk profile is an evaluation of an individual and institution of their willingness and ability to take risk.
Define Your Risk
There are various degrees of risk you can take while dealing with your funds such as:
- Looking at the lower risk level, your funds can comprise of 100% money market instruments which will be highly liquid investment.
- For low to moderate level of risk, your funds can be invested in fixed income instruments having longer tenure.
- For moderate level of risk, your funds can have an allocation of 70% fixed income instruments and 30% equity investment, considering your risk tolerance.
- For moderately high level of risk, your funds can have an allocation of 50% fixed income investment and 50% equity investment.
- For High level of risk, your funds can be allocated to 100% equity considering your preference and risk tolerance.
Summing Up
Based on your objective (risk and return) your funds can be invested accordingly. For example, if you want to build an emergency fund, you'll need more liquidity and lower short-term risk. As a result, your fund can be invested in highly liquid instruments. If, on the other hand, your aim is retirement planning and you have plenty of time, your funds can be invested in relatively high risk instruments.
Summing Up
Based on your objective (risk and return) your funds can be invested accordingly. For example, if you want to build an emergency fund, you'll need more liquidity and lower short-term risk. As a result, your fund can be invested in highly liquid instruments. If, on the other hand, your aim is retirement planning and you have plenty of time, your funds can be invested in relatively high risk instruments.
The form will be uploaded later
