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Risk Profile

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Sagar Shelke
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17 views

Risk Profile

Uploaded by

Sagar Shelke
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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INVESTMENT RISK PROFILE

An individual's risk profile represents the amount of risk that person is willing to take with their
investment portfolio. An investor willing to take on greater risk may invest in unproven or lesser-
known companies or alternative investment options with high growth potential.

In order to provide investment recommendations that are consistently in the investor's best
interests and consistent with the investor's IRP, we start by assuming that a financial adviser
gathers the relevant objective and behavioral information about and from an investor.

Our client is in IT sector. She spent most of the time in corporate office. By considering this, she
is moderate risk taker.

Risk Profile Questionnaire


 Risk capacity and Risk Attitude of the investor are very important inputs to any financial
plan.
 This questionnaire, totaling five pages, has been prepared to help assess your attitude to
investment risk and your capacity to take on investment risk.
 This questionnaire does not seek detailed information on your financial situation. You are at
liberty to not answer the questionnaire. This however would limit the amount of planning
that we can provide for you.
 Please read each question thoroughly and select the response that applies to you most. There
are no correct or wrong responses.
 If you do not understand the question, or any of the choices, please leave the choice blank;
we would review these questions together.

Accessing client’s Risk Profile

Name of Client: Vaishnavi Alurkar

Birthdate: 2 October 1997 (26 years)

City: Pune

State: Maharashtra
QUESTIONNAIRE
1. In which Life-cycle you are
Teenage (15-18)
Young Adult (18-25)
Family Formation (26-35)
Family Development (36-49)
Family Maturity (50-60)

2. Employment Details
Private sector
Government Sector
Self-Employed

3. How many months of expenses can your emergency funds cover?


1-3 months (1 marks)
3-6 months (2 marks)
6-9 months (3 marks)
9-12 months (4 marks)

4. In order to achieve returns on investment I would like to take


High Risk (3 marks)
Moderate Risk (2 marks)
Low Risk (1 marks)

5. Expected Rate of return on the Investment


Potential return of 6% (1mark)
Potential return of 10% (2 marks)
Potential return of 12% (3 marks)
Potential return of 15% (4 marks)
Potential return of more than 15% (5 marks)
6. What percentage of your take home income goes into repaying your liabilities?
Less than 20% (4 marks)
20-30% (3 marks)
30-50% (2 marks)
More than 50% (1 marks)

7. You have inherited a sizable amount recently. How would you invest the same?
Deposit it in bank or invest in liquid funds (1 marks)
Invest entirely into equities (2 marks)
50% in Equities and 50% in Debt Instruments (3 marks)

8. My current and future income source


Very Stable (4 marks)
Stable (3 marks)
Unstable (2 marks)
Very Unstable (1 marks)

9. What is your primary investment objective?


Capital preservation (1 marks)
Capital Appreciation (2 marks)
Retirement planning (3 marks)
Children education (4 marks)
Future lifestyle improvement (5 marks)

10. What percentage of your monthly salary do you save?


Less than 20% (1 marks)
Between 20%-35% (2 marks)
Between 35%-50% (3 marks)
Over 50% (4 marks)

11. How do you save from your regular income?


Save as per planned schedule (4 marks)
Save something every month (3 marks)
Save whatever is left after meeting expenses (2 marks)
Do not save regularly as expenses generally exceed income (1 marks)

12. For big asset purchases like house, car, my tendency is:
I shall try to save most of the money before buying (2 marks)
I shall rely on credit or loans to buy (1 marks)

13. Who can you depend on if you face a financial emergency?


Spouse
Parents
Relatives and Friends

14. Assume that you have an investment portfolio of at the end of 2022. Due to market
conditions, this portfolio has gone down by 20% in 2023. What would be your action?
Sell all of the portfolio. No loss is permissible. (1 marks)
Sell part of the portfolio to cut losses and put the proceeds in secure investments (2marks)
Hold the portfolio and do nothing. Everything goes up in the long term (3 marks)
Compare with the market return, and do nothing if performance is similar (4 marks)
Compare with the market return, and invest more if performance is similar (5 marks)

15. Up to what age would you like to work?


Up to 45
Up to 50
Up to 55
Up to 60
Up to 65
The Scorecard that will be used to assess client’s risk profile and, ultimately, asset allocation mix
is shown below.

Question no. Response Expected Result


3 2 4
4 2 3
5 4 5
6 2 4
7 3 3
8 3 4
9 5 5
10 2 3
11 4 4
12 2 2
13 2 5
TOTAL 31 42

Analysis of client’s risk profile

Mrs. Vaishnavi has a moderate Score of 31 which comes under the grid 25-34 which means –
Moderate Score grid 25-34.

We have made a scorecard based on risk taken by client. So in order to analyze a client’s profile,
the score is divided into conservative risk profile, moderate risk profile and very aggressive risk
profile.
SCORECARD

Score Indicative Risk Description


Profile
15-24 Conservative Being a cautious investor, you don't want to take any
risks with your money. You should put protecting your
financial cash first. You are willing to sacrifice bigger
profits in exchange for comfort.

25-34 Balanced You are a well-balanced investor with a basic knowledge


of how investors behave. You want a healthy balance
between capital preservation and expansion. A limited
level of short-term danger is acceptable.

35-44 Very Aggressive You have a wealth of investing experience. You have the
time to explore the investments with the best returns and
you have a strong tolerance for volatility.

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