Understanding Your Attitude to Investment Risk

Assessing risk tolerance in investment strategies.

Understanding Your Appetite for Risk

Understanding your appetite for risk is essential when considering an investment strategy. Risk profiling is the process we use to determine your correct level of investment risk, taking into account both risk capacity and risk tolerance.

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 to risk helps us build a clear picture of how you wish to invest.

1) Your General Attitude to Money

Your attitude toward losing money plays a key role in determining your appetite for risk. While most people are uncomfortable with the idea of losing money, they may regret being too cautious with long-term investments if they don’t produce the desired returns.

One way to evaluate your attitude to risk is by looking at how you generally behave towards money.
Are you a saver, or do you take calculated risks?
Some people chase high returns, while others won’t risk their capital under any circumstances.
Many people sit somewhere in the middle.

2) Your Investment Timeframe

Your tolerance for risk is likely to change over time, so your investment timeframe is linked to this.

For example, a 25-year-old has a longer period to invest and may be more likely to be 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 will generally focus more on capital preservation than growth. They may need to access their funds in a few years and will likely adopt a cautious or cautious to balanced risk profile.

Everyone differs, of course, and risk preferences vary based on individual circumstances.

3) How We Assess Your Appetite for Risk

We take care to thoroughly understand your appetite for risk when determining which investments best suit you. We will:

Evaluate your current financial circumstances and the bigger picture.
Review your timescales and your goals, such as retirement requirements.
Take you through a risk profile questionnaire, which will provide a score to indicate your position on the risk scale – ranging from cautious to adventurous.

This score can then be adjusted up or down to a level you're comfortable with. It’s crucial that you are confident the potential rewards outweigh the risks of your investments and that you fully understand both.

Seeking Financial Advice

We 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