Risk Profile: The Moderate Investor
All investors are characterized by attitudes towards risk. When it comes to investing in property, it is important that you consider your tolerance or risk profile carefully. This will include finding out how comfortable you are with the possibility of losing money you have invested, or that your investments might have varying returns from year to year. In so doing, you will understand your personal risk tolerance which will help you make the right choice of asset allocation. Here, you will learn how the moderate investor makes his or her decisions.
Traits of the Moderate Risk Profile
Most investors belong to this risk profile. The motivating factor for this group is the desire to invest for the long term and enjoy capital growth. If you are a moderate investor, you can tolerate some market fluctuations in the value of your investment as you anticipate a higher return. For you, it goes down well to know that you are taking some risk to get good returns.
A common factor with portfolios of moderate investors, there is less growth compared to the market’s average. Similarly, when markets slump, the portfolios experience less downward effect compared to the overall market dip.
People in this risk profile understand that they are likely to lose money they have invested if the markets go down, but they also anticipate that they will enjoy some gains when the markets go up. However, their primary goal is to invest for the long-term, at least 5 years with almost no dependency on the investments for an income.
However, that is not all about a moderate investor. Though ready to take risk, these investors aren’t comfortable enough with market risk to warrant aggressive investment of their funds. As a result of this, these investors will achieve returns slightly more than inflation and taxes.
Where to Invest?
Does this profile sound like you? Moving in appropriate time frames is important for you as a moderate investor – a risk profile much suited for investing in property. This will ensure that you maintain returns with stability for the sole reason that investments in property maintain higher allocations compared to cash and bonds.
When making your choices might prove a difficult task, we can provide expert help to ensure that you take the right path in your investments for even better returns. That includes timely decisions even when making long term investments. Contact us today and we will help you walk through the process successfully.
Article by James Parnwell & Jess Dovane
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