Are you a young professional investing for the long term, or are you looking to consolidate your savings just before you retire? Your investment strategy can vary a great deal depending on your own individual situation. This is why it is essential to draw up an investor profile to guide your investment choices.
Based on personal factors, your investor profile identifies how best to allocate your assets to achieve your investment objectives in the desired time-frame. To do this, experts primarily consider the following:
- Your investment objectives in terms of capital protection, yield and investment horizon;
- Your risk aversion, i.e. your willingness to bear risks and ability to cope with fluctuations in your portfolio;
- Your understanding of financial instruments and their associated risks;
- Your financial capacity and constraints, i.e. your income sources, any commitments that you may have, and your financial standing.
Your investor profile identifies how best to allocate your assets to achieve your investment objectives in the desired time-frame.
Based on this analysis, you will be given one of the following profiles:
- “Defensive”. Your main objective is to protect your capital. You are very cautious and want to minimize fluctuations, even if this means limited returns. Investment horizon: between 2 and 4 years.
- “Low”. You are looking for a slightly higher return and are willing to sacrifice some security for a small portion of your capital. You will not overreact to temporary price dips. Investment horizon: between 3 and 5 years.
- “Medium”. Your situation, knowledge and ambitions are such that you can seek an attractive return on a diversified portfolio, with bigger positions on volatile products. Investment horizon: between 5 and 7 years.
- “High”. Your situation and understanding of financial instruments mean that you can be ambitious and take very big capital risks for the sake of high returns. Investment horizon: between 7 and 10 years.
Haven’t you identified your investor profile yet? Would you like to invest in a management mandate? Find out more from your personal Relationship manager. They are here to help.