Risk Profile
How sensitive are you to risk?
The third key to starting your investment journey is understanding your Risk Profile, which is essentially your risk tolerance. We standardize this on a spectrum from 1 to 5, with intervals of 0.5 for added granularity:
1 (Very Low)
You're someone who values stability above all. You plan your moves with precision and handle your finances with a conservative touch. Surprises are not your forte, and you prefer a predictable financial environment.
2 (Low)
With a low risk profile, you're open to investing but prefer sticking to conventional, low-risk methods. You're cautious about stepping outside the norm, seeking moderate gains without dramatic shifts in strategy.
3 (Average)
You have an average risk profile if you enjoy an occasional thrill without being overly attached to wealth accumulation. You're not here for drastic changes but are open to exploring opportunities that balance risk and reward.
4 (High)
If your risk profile is high, you thrive on taking chances, whether through gambling or trying untested ventures. You regularly step out of your comfort zone, finding excitement in the unpredictability of outcomes.
5 (Very High)
A very high risk profile marks you as someone who's all in for risk. You might be an adrenaline junkie, a professional gambler, or a day-trader. While this lifestyle can lead to significant rewards if managed with discipline, it's not for the faint-hearted and often carries a high stress level.
Take a moment to assess where you fall on this spectrum. Your risk profile will dictate the types of investments that suit your comfort level with potential gains versus the possibility of losses. If you find yourself between two values, feel free to assign yourself a half-decimal to situate yourself halfway between them.