Understanding Your Attitude to Investment Risk

Understanding and assessing your risk tolerance in investments.

Understanding Your Appetite for Risk

When considering an investment strategy, understanding your appetite for risk is key. Risk profiling is the process we use to determine your correct level of investment risk, taking into account two important factors:

Risk capacity: The level of financial risk you can afford to take.
Risk tolerance: The level of risk you’re comfortable with.

Assessing your attitude toward risk helps us build a picture of how you wish to invest.

Your General Attitude to Money

Your attitude toward losing money is a crucial part of determining your appetite for risk. While most people are uncomfortable with the idea of losing money, some may regret being overly cautious with long-term investments that don’t yield the desired returns.

One way to evaluate your attitude to risk is by examining your general behavior towards money.
Are you a saver, or do you take calculated risks?
Some people chase high returns, while others avoid risking their capital under any circumstances.
Many individuals fall somewhere in the middle.

Your Investment Timeframe

Your tolerance for risk is likely to change over time, making your investment timeframe a critical factor.

A 25-year-old has a longer period to invest and may be more willing to take risks as an adventurous investor.
The longer the timeframe, the more likely short-term losses can be tolerated because there is time to recover.
Older investors nearing retirement often prioritize capital preservation over growth, as they may need access to their funds soon and are less likely to take significant risks.

Risk profiles tend to be more cautious or cautious to balanced for those nearing retirement, although everyone’s situation is different.

How We Assess Your Appetite for Risk

We take the time to fully understand your appetite for risk before recommending any investments. Our assessment includes:

Evaluating your current financial circumstances.
Considering the bigger picture, including your timescales and financial goals (such as retirement plans).

You will also complete a risk profile questionnaire, which provides a score indicating your position on the risk scale, from cautious to adventurous. Your score can be adjusted based on your comfort level, ensuring that you are happy with the balance between potential rewards and risks.

It is crucial to fully understand both the risks and potential rewards of any investment.

Seeking Financial Advice

We strongly recommend seeking advice from a regulated financial adviser before making any investment decisions.

Contact one of our advisers to take you through our risk-profile questionnaire by emailing:
enquiries@bgwealthmanagement.net

Our Private Client Engagement Process

We follow a structured and personalised approach to ensure your family's international wealth is managed with precision and clarity.

Initial Discovery Call

Before you engage us, we’ll get to know you to make sure we’re a good fit in terms of understanding what is most important to you.

Confirming Our Understanding

After our discovery call, we will summarise our understanding of your current situation and the key objectives which will ensure we're aligned with your goals.

Create A Personalised Plan With You

Once you’re happy that we’re right for you, we’ll provide our recommendations and implement them for you. But there’s never any pressure from us to proceed – that’s just not our style.

Implementation and Monitoring

We will implement your plan, constantly monitor and report on the performance to ensure your private wealth is optimised and aligned with your goals and working for you. Additionally, we’ll provide you with regular statements and a half yearly review to ensure that you remain up to date with any investment or tax changes and that we continue deliver for the long term.

Arrange a discovery call