Defining Your Risk Profile

Successful investing requires an understanding of the fundamental risk and return relationship – the more risk you take, the higher your returns are likely to be in the long term. And the higher the long-term returns, the more volatility you may have to endure in the short term.


A PGFS financial advisor will help define your risk profile via an easy to understand series of questions. The answers to these questions are used to help determine your risk tolerance. From this, PGFS will recommend the most appropriate investment portfolio which is consistent with your risk profile and wealth creation goals.


Below is sample of the questions used by a PGFS financial advisor as part of the risk profile definition process.

How much of your income would be spent on servicing current debts eg: credit cards, rent or mortgage payments:

  • more than 30%
  • between 10% to 30%
  • less than 10%

In the event of an emergency, how much cash savings would you have?:

  • less than 3 months of living expenses
  • 3 to 6 months of living expenses
  • greater than 6 months of living expenses

Is your current state of employment:

  • Insecure
  • Relatively Stable
  • Highly Secure

Do you require any income from your investment portfolio?

  • all income earned to be received
  • partial income earned to be received
  • all income earned to be reinvested

Do you require access to your investment capital:

  • I require it for spending
  • in case of emergency
  • I have no requirement for access to my investment capital

Would you change to another investment if:

  • your investment drops in value
  • the value drops more than 20% during a given year
  • I would not sell in the short term based on negative returns

Where do you currently invest most of your money?

  • mainly cash and term deposits
  • shares, investment, diversified managed funds etc.
  • aggressive investments including small company shares or speculative investment opportunities

Which statement best describes your investment objectives:

  • a secure safe place for my investments with no loss in capital
  • investments that show steady growth, and have minimal risk to my capital
  • an aggressive mix of investments and mostly those with higher risk and the chance for higher returns

What type of return would you expect from your investment?

  • regular income
  • both income and capital growth
  • mainly capital growth

What is your investment time frame?

  • one to four years
  • five to ten years
  • more than ten years