Risk Profile: The Moderately Conservative Investor
What is your investment risk tolerance like? Did you know that you can use your fear of risk in investment to change the way you investand gain a lot? Investment risk tolerance differs from one investor to another, prompting most investment managers to group clients into five different categories according to their risk profile. Using that profile, they are able to advise their clients to make decisions that will favor their interests in the investment markets. Let’s look at the risk profile known as the moderately conservative group.
Characteristics of the Moderately Conservative Risk Profile
Unlike the absolute conservative investor, a moderately conservative risk profile is worried, and has a slightly higher level of tolerance to risk despite being adverse to short-term downfall fluctuations in the markets. This investor aims for a little more return than the conservative counterpart.
Most investors categorized under the moderately conservative risk profile are either getting their current paycheck from portfolio income or are retired, retiring soon or have suffered a bout of poor portfolio management that led to huge losses in the past. They look to be protected from the downside market fluctuations in some way. Therefore, investors in this category are reluctant to participate in the markets even when the fluctuations are on the positive side of potential.
The portfolio of the moderately conservative investors will decline with the market’s decline, but they will still be rigid to be protected from any imminent sudden double-digit percentage declines in their investment portfolios. They simply want to play a defensive game through and through with the expectation of remaining in it. As a result, they see low double digit gains in percentage when markets start to boom.
Where to Invest for Gains
Since moderately conservative risk profiles are characterized by little capital gains distributions, choosing to invest in property will work best for them since real estate can track inflation. Other appropriate options to invest in for this risk profile include fixed income securities, some types of stocks and commodities that are known to shadow inflation.
Contact us today to find out your risk profile and learn a lot more about how to invest for maximum returns. We will guide you to make every right investment decision that you will be comfortable with.
Article by James Parnwell & Jess Dovane
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