What type of Investor are you?

Any investment decision you make means that you must take a risk of some sort. The decision will directly relate to the amount of money you invest, your circumstances at the time and your needs for the future.

Did you know your Superannuation is an investment

  • Are you happy with your Super returns?
  • Do you know what you are invested in?
  • When is the last time you reviewed your Super?

The Client Risk profile – What is it?

By asking certain questions, we will identify what you would do in such circumstances, regardless of whether you have been in them or ever likely to be in them. Your answer to a specific question may be influenced by a particular experience, mood or feeling at the time.

Some questions give you a limited choice of responses and may not include what would be your preferred answer. These questions are designed to gain an idea of what you would do given the limited information.

Understanding, identifying and agreeing on your risk profile is a critical step in designing the right investment strategy to meet your goals and objectives while taking into account your tolerance to risk.

So, what type of Investor are you?

  • Defensive
  • Moderately Defensive
  • Balanced
  • Growth
  • High Growth

Let us help you discover the type of investor you are and ensure you are heading in the right direction to achieve your financial goals.

Risks Associated with Investing

Any investment decision you make means that you must take a risk of some sort. The decision will directly relate to the amount of money you invest, your circumstances at the time and your needs for the future. If you have a better understanding of risk, you can make a more informed investment decision, accepting some risks and rejecting others. The important point is that you understand the relationship between risk and reward, particularly over your investment time frame.

There are various risks associated with all investment. These include inflation, volatility and market risk, specific risk and legislative risk.

What is the Relationship between Risk and Return?

Risk and return are positively correlated. In real terms this means, the higher the risk associated with an investment, the higher the expected return and vice versa. This relationship is called the ‘Risk vs.

Return Trade off’ (see chart below) and is a factor that is taken into consideration in defining your tolerance to risk. Investments such as shares may offer higher returns over the longer term, but there is a greater inherent risk. In contrast, cash and fixed interest investments are considered to be less risky, but offer lower returns.

The relationship between risk and return in different asset classes is illustrated in this graph.

Managing Risk in Investing


The most widely recognized method for managing portfolio risk is through diversification of investments and investment management. In order to minimise the volatility and risk of your investment portfolio, it is prudent to ensure that it is sufficiently diversified against overexposure to a single asset, asset sector, geographical region or investment manager. This is because no one asset, asset class, geographical region or investment manager provides the best performance over all time periods. A range of investments should reduce the risk of the portfolio experiencing drops in performance across the board simultaneously, as one asset class or manager may perform well to counter the poor performance of another.

Asset allocations

Investment assets generally fall into two basic categories, income producing assets and growth assets. Income producing assets include, cash, term deposits, fixed interest and debt securities and general hold less risk than growth assets such as shares, property and alternative investments*.

In order to achieve your goals and objectives, it may be necessary to vary your actual asset allocation from the benchmark. Variations of plus/minus 10% are within generally accepted tolerances, but any variance greater that should not be recommended without explanation.

The indicative asset allocation table with example asset classes is as follows:

Stuart Long – Client Services Manager