UNDERSTANDING YOUR ATTITUDE TO RISK & CAPACITY FOR LOSS

Transcription

1 UNDERSTANDING YOUR ATTITUDE TO RISK & CAPACITY FOR LOSS Name Date Completed... Financial Advice & Wealth Management

2 CAPACITY FOR LOSS Please read and answer the following three questions relating to either Income or Growth. There is no right or wrong answer, just the answer that reflects your view. Each answer is allocated a mark of,, or 3. Your total score will allow us to advise you on the most appropriate investment direction for your pension or investment. If you are investing to generate an income Q. How long do you intend to hold this investment before you start drawing an income from it? (please tick) 3 Within the first 5 years Between 5 and years Over years I do not have a fixed term Q. How much would your standard of living be affected if the income from this investment were to fall below your expectations? It would have a significant impact. I cannot afford for this income to decrease and I will struggle financially It would cause me to re-assess my standard of living and make some cut-backs Not much as I have alternative investments to maintain my lifestyle Q3. If you needed emergency funds, would you consider taking them from this investment? I have no other alternative. I would most certainly need to access this investment I would consider taking funds from this investment if necessary No. I have other savings that I can use for emergencies

3 If you are investing to generate capital growth Q. How long do you intend to hold this investment before you use it? (please tick) 3 Within the first 5 years Between 5 and years Over years I do not have a fixed term Q. How much would your standard of living be affected if the income from this investment were to perform below your expectations? It would have a significant impact. I cannot afford for this income to not meet my goals It would cause me to re-assess my standard of living and make some cut-backs Not much as I have alternative investments to maintain my lifestyle Q3. If you needed emergency funds, would you consider taking them from this investment? I have no other alternative. I would most certainly need to access this investment I would consider taking funds from this investment if necessary No. I have other savings that I can use for emergencies Now add up your total score & check it against the capacity for loss scale on the next page: TOTAL SCORE = /7

4 Capacity for Loss Scale of Loss Total Capacity for Loss Description to Low capacity for loss You cannot afford for the investment to not meet your objectives as failure to do so could have a significant consequence on your standard of living. This may be further compromised as there is a higher possibility that you may need access to the money within the investment time-line. Low to Medium capacity of loss You may be able to afford slight underperformance of the investment. This could have some consequences on your standard of living. 3 to 4 Medium capacity for loss You may be able to afford some underperformance of the investment. This could cause you to adapt your standard of living. 5 Medium to High capacity for loss You can afford to take some risk associated with investment as you can withstand some underperformance. 6 to 7 High capacity for loss You can afford to take the risks associated with investment and can withstand any underperformance. I confirm that my capacity to loss is: CAPACITY / 7 I confirm that I have read, understood and agree with the assessment and explanation of my Investor Profile of this questionnaire. Please now process to implement your recommendations based on this assessment. Signature Name Date Estate Capital Financial Management Ltd Registered in Wales No Registered Address: 7 Uplands Crescent, Swansea, SA PA Authorised and regulated by the Financial Conduct Authority 3

5 ATTITUDE TO RISK Please read and answer the following ten questions. There is no right or wrong answer, just the answer that reflects your view. Each answer is allocated a mark of, or. Your total score will allow us to advise you on the most appropriate investment direction for your pension or investment. Q. Your employer offers you a bonus, which you can take as cash, shares or a mixture of both. The shares have a 5/5 chance of doubling in value, or becoming worthless over the next year. Which would you take? I would take the entire bonus as cash I would take half the bonus as cash and half the bonus as shares I would take the entire bonus as shares Q. You are offered a sales position with a new firm and are offered three options for your pay. Which would you take? 5, fixed annual salary, fixed annual salary,plus a performance bonus between and, 5, fixed annual salary, plus and unlimited performance bonus Q3. If the UK stock market fell by 4% during one month what would you do with your investment in that market? Sell all of my investment Sell a portion of my investment Hold my investment 4

6 Q4. Which of these statements best describes your attitude when investing? I am more confident about limiting losses, than achieving above average returns I am equally concerned about limiting my losses, as I am about achieving above average returns I am more concerned about achieving above average returns, than limiting losses Q5. The chart below shows the highest one year gain and the highest one year loss, on three different hypothetical investments of,. Given the potential gain or loss in any one year, where would you invest your money? Range of possible values in year s time Investment A Investment B Investment C 4 6 8,, 4, 6, Q6. When it comes to investing I would describe myself as... Inexperienced Reasonably experienced Experienced Q7. For many investors, the possibility of losing some of their investment is of greater concern than the possibility of making a profit. When making a significant investment decision, which is more important to you? The potential loss I would consider both equally The potential gain 5

7 Q8. You are appearing on the hit game show WIN A MILLION. Unfortunately you do not know the answer to the next question. Which of these options would you choose? Decide not to answer, and go home with 5 Eliminate two incorrect answers, leaving the right answer and one wrong answer. If you answer correctly, If you answer incorrectly, you ll leave with 5 Guess the answer. If you get the answer right, you ll leave with,, if you get it wrong you ll leave with nothing Q9. Please choose the most appropriate ending for this statement: The longer you have before taking your pension the more important it is to To have some equity investment, but with a significant level invested in other lower risk investments To have a significant level of equity investment, but also some other investments To be fully invested in equities Q. You contributed, to an XYZ Premier Investment Plan years ago, choosing to invest your money in a XYZ Equity Fund. Unfortunately, the value of your Plan has recently fallen to 85. Do you: Switch all of your investment into an XYZ Safer Investor Fund, with less risk of future falls in value, but with lower potential future investment returns Remain invested in the XYZ Equity Fund, hoping for better returns in future Remain invested in the XYZ Equity Fund and make additional payments into the plan Now add up your total score & check it against the investment scale on the next page: TOTAL SCORE = / 6

8 Attitude to Investment Scale of Risk Total Risk Profile Risk Name Risk Description Investment Aim Score to 3 to 4 No Risk You are not prepared to lose any of your money Defensive You accept the risk of a small loss to your money A No Risk investor prefers not to take any risk with their capital. They accept that their returns may fall short of inflation. Defensive investors prefer taking a small amount of risk to achieve modest or relatively stable returns. They accept there may be some short term periods of fluctuation in value. As an indication, Defensive investments could potentially see a maximum annual return of around.98% and a maximum loss of around -5.96%. 5 to 6 3 Cautious You accept the risk of a small to moderate loss to your money Cautious investors want to try and achieve a reasonable return, and are prepared to accept some risk in doing so. Typically these portfolios will exhibit modest yet frequent fluctuations in value. As an indication, Cautious investments could potentially see a maximum annual return of around 7.5% and a maximum loss of around -.49%. 7 to 8 4 Cautious to You accept the risk Balanced of a moderate loss to your money Cautious to Balanced investors don t seek risky investments but don t avoid them either. They are prepared to accept fluctuations in the value of their investments to try and achieve better long term returns. These portfolios will be subject to frequent and at times significant fluctuations in value. As an indication, Cautious to Balanced investments could potentially see a maximum annual return of around.4% and a maximum loss of around -3.8%. 9 to 5 to 6 Balanced You accept the risk of a greater than moderate loss to your money Balanced You accept the risk of a greater than moderate loss to your money 7 Balanced investors aim for higher long term returns and understand that this can also mean some sustained periods of poorer performance. They are prepared to accept significant fluctuations in value to try and achieve better long term returns. As an indication, Balanced investments could potentially see a maximum annual return of around 5.37% and a maximum loss of around -6.%. Balanced investors aim for higher long term returns and understand that this can also mean some sustained periods of poorer performance. They are prepared to accept significant fluctuations in value to try and achieve better long term returns. As an indication, Balanced investments could potentially see a maximum annual return of around 9.6% and a maximum loss of around -8.8%.

9 Attitude to Investment Scale of Risk Total Risk Profile Risk Name Risk Description Investment Aim Score 3 to to to 8 9 Balanced to You accept the risk Speculative of a loss to your money Speculative You accept the risk of a significant loss to your money Highly You accept the risk Speculative of losing most or all of your money Balanced to Speculative investors aim for high long term investment return and do not overly worry about periods of poorer performance in the short to medium term. Ordinarily the portfolio can be subject to the full extent and frequency of stock market fluctuations. As an indication, Balanced to Speculative investments could potentially see a maximum annual return of around 33.7% and a maximum loss of around -.6%. Speculative investors aim for high long term investment returns and do not overly worry about periods of poorer performance in the short to medium term. Ordinarily these portfolios can be subject to the full extent and frequency of stock market fluctuations. As an indication, Speculative investments could potentially see a maximum annual return of around 37.% and a maximum loss of around -4.46%. Highly Speculative investors take risks with capital and understand in some circumstances they could lose all of their money and that big losses may occur quite frequently. As an indication, Highly Speculative investments could potentially see a maximum annual return of around 4.96% and a maximum loss of around -7.9%. I confirm that my attitude to risk is: INVESTMENT / REGULAR SAVINGS / PENSION / I confirm that I have read, understood and agree with the assessment and explanation of my Investor Profile of this questionnaire. Please now process to implement your recommendations based on this assessment. Signature Name Date Estate Capital Financial Management Ltd Registered in Wales No Registered Address: 7 Uplands Crescent, Swansea, SA PA Authorised and regulated by the Financial Conduct Authority 8

10 Maximise your returns with a level of risk you re entirely comfortable with Financial Advice & Wealth Management 7 Uplands Crescent Swansea SA PA Phone: mail@estatecapital.co.uk Authorised and regulated by the Financial Conduct Authority.