Risk profiles: are you really a high growth investor?
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What is an investor risk profile and why is it important?
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How can understanding risk help investors make better decisions?
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Kate Campbell, welcome to this episode of the Australian Finance Podcast.
What questions should you ask to determine your risk tolerance?
It is wonderful to be back, Owen, to talk about a very exciting topic today.
Yeah, it's probably the most exciting topic that anyone has ever covered in finance, which is risk. Risk profiles, risk management, how you determine risk for yourself and your investing and your portfolio and all that sort of wonderful stuff. We're going to try and use as many examples as we can because risk profiling, at least the way that we've done it as an industry, has kind of been very abstract. And we try to make it one size fits all and then expect people to follow that. And oftentimes they never really understand why they're in a particular place or what have you. Financial advisors do a great job, but we're going to try and help you to do it yourself and to try and think about like where you should be investing and where you can consider what's an appropriate level of risk to take.
So Kate, I guess just to start us off, we'll get to what risk profiles are. But how does understanding risk help us at all?
When it comes to investing, it always involves risk unless you're putting your money in a term deposit.
How do financial advisors assess risk profiles?
And I think we often only sort of look at it with what's the risk level of that product? What's the likelihood that I'm going to lose money when I invest in that? But we don't actually think about our own tolerance to risk. And it's very easy, as we've said in the past on the show, it's so easy to say you're a high risk investor until stuff hits the fan. And for many of us that have just been investing for the last few years, we have had a fantastic time in the market. And it's been very easy to perform well without actually having to know too much at all. And I think it's really important for people to be prepared and maybe a lot of the stuff we're going to be talking about is more about internal reflection and talking through it.
It's a bit more philosophical, let's say, than just sort of facts and figures because I can't just look at you and say you're a high-risk investor or you're a conservative investor. It's something you have to work out for yourself and you might even be wrong when you're trying to figure that out because you're You might think that you are, but then when you see your portfolio drop from $100,000 to $30,000, not $30,000, it drops to $70,000.
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Chapters
8 chapters
1
What is an investor risk profile and why is it important?
0:00–0:57
2
How can understanding risk help investors make better decisions?
0:57–1:46
3
What questions should you ask to determine your risk tolerance?
1:46–2:55
4
How do financial advisors assess risk profiles?
2:55–4:03
5
What factors influence your personal risk profile?
4:03–5:06
6
How do market conditions affect investor behavior?
5:06–5:52
7
What strategies can help manage risk during market volatility?
5:52–6:37
8
How can self-reflection improve your investment decisions?
6:37–40:31
Speakers
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