It’s tough to determine which investments to use if you don’t know your own risk tolerance. That’s why we use a program to help clients find their own risk tolerance and to score investments so they match up accordingly
Are Your Investments in Balance or Are You at Risk?
What is your risk tolerance when it comes to investing money in the stock market?
Are you risk adverse or do you not mind subjecting your money to large losses in the stock market? Or maybe you are somewhere in between?
We believe that most people have a general idea of their risk tolerance but not a specific understanding of their tolerance.
With the advent of new technologies, finding your specific investment risk tolerance can be done in a matter of minutes.
The investment risk software we use categories investors into four categories:
Capturing Your Risk Score
To obtain your personalized Risk Score, all you need to do is go through the risk program and answer a series of questions. It should take you less than 5 minutes to complete. When done, the program will give your Risk Score. This Risk Score is vital in helping you understand the risk of the investments you currently have and the risk of investments you should use in the future.
Scoring Your Current Investments
After finding your Risk Score, you should then be eager to find out if your current investments meet or exceed that Risk Score. We believe you’ll be shocked at the results (meaning there is good chance the investments you currently have are more or even far more risky than you thought).
Match Your Portfolio to Your Risk Score
After finding your Risk Score, if your current investments are not 100% in line, you can use the Score to realign your portfolio to make sure it matches up with your Risk Score. Realigning your portfolio will give you comfort that your investments are positioned to meet your expectations of managing investment risk.
The risk software we use allows us to stress test current and newly proposed portfolios to determine how they would have done during certain periods of time when the stock market lost significant value in a short period of time (like from the highs of 2007 to the lows of 2009).