Investor Profile Essay

1488 Words May 19th, 2013 6 Pages
Investor Profiles
When it comes to investing, it is crucial to determine one’s risk tolerance, expectation for capital appreciation, income requirements, preferred portfolio volatility, time horizon, and of course, the expected overall potential return. These characteristics are generally summed together to form the investor profile of a particular investor. It will allow an individual to make clear of their goals and objectives, determine their comfort level with risks and uncertainties, as well as other valuable information necessary to make wise investment decisions in the future.
There are six standardized investor profiles described in the article, “The things that keep investors smiling”. They are listed as: ‘aggressive growth
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A balanced investor has a moderate level of risk tolerance. Their portfolio includes a mixture of fixed income investments, and investments for capital appreciation. They require some income from a portion of their investments, and will withstand fluctuation in their portfolio to seek capital gain. These investors have a moderate investment horizon, and will expect overall potential growth with their portfolio.
A conservative investor has a moderately low level of risk tolerance. They strive for safely in their portfolio, and will have a variety of fixed income investments and some for capital gain. These investors require more income than capital gain, and will endure moderate fluctuation in their portfolio. Their time horizon is much shorter than the other investor profiles previously mentioned.
An income investor is less willing to take risks with their investments. They require regular income from the investments to satisfy their daily expenses. These investors strive for consistency in their investments with less portfolio volatility. Since these investors are less inclined to take risks with their investments, their capital appreciation and overall potential return is much lower than most investors. These investors invest in a short time horizon.
A secure investor is one that takes the least amount of risks. They value security of their capital by investing in safe low return investments, such as GICs. These

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