Investor Profile Questionnaire - Calibre Private Wealth

Assessing your Investor Profile

When investing it is important that you consider the level of risk you may be taking on as well as the return you would like to achieve from an investment. You may need to consider a trade-off between the risk you are willing to take and the level of return you would like to achieve or would need to meet your needs and objectives.

Risk can mean different things to different people. For example, investment risk could mean:

the possibility of a loss of capital (permanent reduction in value of an investment), or
the level of volatility of an investment (short term changes in value – up and down), or
the risk of an asset not producing enough income to live on, or
the risk of an asset not growing enough to keep up with the rising cost of living.

By working through this section, our aim is to understand more about:

your risk capacity,
your risk tolerance,
your risk appetite and how to balance this against your desire to achieve your needs and objectives

This will help us work out an appropriate level of investment risk for your personal situation, and the type of investments and strategies that correspond to this.

Investor risk capacity

Your investor risk capacity is the extent to which you can withstand the impact of unexpected, negative events, such as a loss of capital or a decline in asset value.

Generally, your investor risk capacity will be influenced by a range of factors, such as:

how long you will continue to generate an income from employment or business (the longer you are generating an income, the more time you have to recover from negative events),
how much you could reduce your expenses before this has an unacceptable impact on your lifestyle (you may be able to give up some items but not what you need or want the most),
how far away your needs and objectives are and when you are likely to need access to income or your savings to pay for them – your investment timeframe.

You will most likely have needs and objectives that have different timeframes. Typically, the shorter the timeframe for an investment, the lower your capacity to take risk.

Put another way, if something negative occurs during a shorter timeframe, the less time your income, savings or investments have to recover.

Common characteristics and details for each timeframe are provided below:

Short term objectives (Investment timeframe – up to 3 years)

Generally lump sum in nature, for example, saving $60,000 for a deposit on a house in 3 years.
May also include short term income requirements.

Medium term objectives (Investment timeframe – between 3 and 5 years)

Generally lump sum in nature, for example, saving $20,000 to upgrade a car in 5 years.
May also include medium term income requirements.

Long term objectives (Investment timeframe – longer than 5 years)

Generally focused towards providing a long term regular income into the future, for example, accumulating sufficient savings to deliver an income of $40,000 per year through retirement.
May also include your long term lump sum expenses.
Planning and ongoing reviews will be critical to the attainment of these objectives.

Your risk capacity will be one of the things we consider in working out the most appropriate investments and strategies for you.

Investor risk tolerance

A very important part of giving you appropriate advice is assessing how willing you are to tolerate changes in asset values in the short term. These changes, known as “volatility”, represent one type of investment risk. Investors take risk because they may need or want to trade-off short-term stability in asset values for the possibility of higher investment returns in the long term.

Your investor risk tolerance has a lot to do with how you feel about these short term changes in value.

Ultimately, your investor risk tolerance is the amount of risk that you are prepared to take and the degree of uncertainty or volatility that you are willing to accept when investing to achieve your financial goals and objectives.

Investor risk appetite

Investor risk appetite can be defined as the amount and type of risk that an individual is willing to take in order to meet their needs and objectives. Individuals will have different risk appetites depending on their needs and objectives. A range of appetites exist for different risks and these may change over time.

By using a combination of cash, defensive and/or growth assets, we can create an investment portfolio that is most appropriate for you. Examples of these assets are listed below.

Cash – bank accounts, term deposits, loan offset accounts.
Defensive – fixed interest (Australian and international) e.g. bonds (government, corporate).
Growth – shares (Australian or international) and property

Investor Profile	Target Asset Mix
Cash (7-8 Points) For investors with a short-term time from and low tolerance of risk. Suits investors seeking a return similar to that of cash. You prefer maintaining the current value of your investment above all other considerations.	100% Defensive
Defensive (9-11 Points) For investors with a time frame of at least three years and a low to moderate tolerance of risk. The 67% weighting towards defensive assets means the portfolio is likely to deliver relatively stable returns, with low volatility. Suits investors seeking regular income with some opportunity for capital growth. You prefer a relatively stable range of returns over the short to medium term with potential for modest long-term growth.	67% Defensive / 33% Growth
Moderate (12-15 Points) For investors with a time frame greater than three years and a moderate tolerance of risk. A moderate mix of growth and defensive assets means the portfolio is likely to deliver relatively consistent returns, with some volatility. Suits investors seeking some capital growth over the medium term, and who want lower volatility than portfolios with a greater weighting towards growth assets. You prefer steadier performance over time with some opportunity for growth.	48% Defensive / 52% Growth
Balanced (16-19 Points) For investors with a time frame of at least five years and a moderate tolerance of risk. The 71% weighting towards growth assets means the portfolio will have significant volatility. Suits investors seeking capital growth over the medium to long term and who want lower volatility than portfolios with a greater weighting towards growth assets. You want some opportunity for growth and can tolerate some up and down movement in your portfolio’s value.	29% Defensive / 71% Growth
Growth (20-22 Points) For investors with a time frame of at least seven years and a moderate to high tolerance of risk. The 85% weighting towards growth assets means the portfolio will have high volatility. Suits investors seeking capital growth over the long term and who want less volatility than that provided by a 100% weighting towards growth assets. You have a preference for growth and can tolerate significant up and down movement a portfolio’s value. You want some opportunity for growth and can tolerate some up and down movement in your portfolio’s value.	15% Defensive / 85% Growth
High Growth (23-25 Points) For investors with a time frame greater than ten years and a high tolerance of risk. The 92.5% weighting to growth assets means the portfolio will have higher volatility than portfolios with any defensive assets. Suits investors aiming to achieve high capital growth over the long term and who can tolerate wide, and sometime sudden, up and down movements in portfolio value.	7.5% Defensive / 92.5% Growth