Investment Risk Return Profiler

To get profit without risk, experience without danger, and reward without work is as impossible as it is to live without being born.

A.P. Gouthey, Philosopher

Your investment risk-return profile

We need to better understand your investment risk/return profile before providing investment advice. The following three questions, when combined with investment time frame helps to define your risk profile.

Q1: What is your risk/return trade-off?

You are the holder of an internationally diversified portfolio of investments. Specific risk (that is risk related to individual investments) has been diversified away by the use of investment funds. How much market risk (that is the amount of movement in the investment up or down) can you comfortably endure for the prospect of higher returns in the long term?

1.   Variation in return +3% to -1%
2.   Variation in return +7% to -3%
3.   Variation in return +11% to -5%
4.   Variation in return +15% to -7% 
Please enter the number of your choice 
Q2: How long can you comfortably endure temporary paper losses in exchange for the prospect of higher returns over the long term? 
1.   I am not prepared to endure temporary paper losses
2.   I could stand temporary losses for up to 6 months
3.  I could stand temporary paper losses for up to 2 years
4.  I could stand temporary paper losses for up to 3 years
Please enter the number of your choice 
Q3: Do you want growth or income?
1.   Income ONLY
2.   Mainly Income with a little Growth
3.   Some Income but mainly Growth
4.   Growth ONLY
Please enter the number of your choice 
Q4: What is your investment timeframe:
1.   Short term 1-2 years
2.   Medium term, 3-10 years
3.   Long term, 10 years or more
Please enter the number of your choice 

Risk-return profile   

Asset allocation

Risk-return Profile % growth assets % defensive assets
Defensive 10 90
Conservative 20 80
Balanced 60 40
Growth 70 30
Aggressive 98 2

In our blog the randomness of investment returns we discuss how annual returns vary randomly with region and asset class. The key is time in the market versus timing the markets.

What is investment risk?

The variability of returns is investment risk. 

It is important to realise that returns do fluctuate, even fixed interest.  At times there may even be negative returns. Refer to our blog The average market return.

Investment sector Historical average, real rate of return Volatility (investment risk)
Cash 0.0 – 1.0% +/-  4.4%
Fixed interest 1.0 – 1.5% +/-  7.1%
Property 2.0 – 3.0% +/-  3.8%
Equities 5.0 – 6.0% +/-  21.2%
Small companies 8.0 – 9.0% +/-  35.2%
Managed futures 8.0 – 10.0% +/-  20.0%

Real Rates of return equals the declared return less the effect of inflation. The volatility figure represents the amount that returns may be expected to differ from the average in any one year. For example, property returns can be expected to be between (1.8%) and 6.8% the majority of the time.


Before making an investment decision on the basis of this Risk Profiler, you need to consider, with or without the assistance of a financial adviser, whether the decision is appropriate having regard to your individual investment objectives, financial situation and personal needs.


This Risk Profiler is a simple tool based on limited information and as such should not be relied on solely when making investment decisions.
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