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Investment Insights

How do I define a 'risk budget'?

Kiwi Invest

Written by Kiwi Invest

Keeping you up-to-date with all the latest updates at Kiwi Invest.

Wednesday 28 August, 2019

Putting risk, before reward? That's smart.

While our industry tends to focus only on reward... we believe that a strong investment strategy starts with a careful and up front evaluation of risk.

Your personal ‘risk budget’ is evaluated in a detailed personal discussion with your dedicated senior adviser, and informs every subsequent investment decision they make.

 

DETERMINING YOUR INVESTMENT 'RISK BUDGET', COMES DOWN TO FOUR KEY THINGS:

risk_goals

YOUR GOALS

What do you want your investments to achieve?

risk_capacity

YOUR CAPACITY

What level of risk can you manage in financial terms?

risk_willingness

YOUR WILLINGNESS

What amount of risk are you personally prepared to take?

risk_timing

YOUR TIMEFRAME

What period are you able to keep your money invested?

(Your answers also need to recognise that, without risk, there is often limited reward – and an overly conservative strategy, that fails to outpace inflation, can be a significant risk over the longer term).

 

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