Module 2 - Part 3/5: Risk Profiles and asset allocation

Risk Profiles and Asset allocation!

Welcome to the EasyEquities Mentorship program, where we make investing EASY for you!

We have prepared 6 modules that we will post over the month of July.
The modules are intended to give investors the necessary knowledge to start their investing journeys.

Lets get right into it!

Understand your risk profile

Your risk profile is how much risk you can take on. Your risk profile is centered around 3 things your objectives, your ability to take risk, and your willingness to take risk.

Your objective is how much money you want and by when, your ability to take risks depends on variables such as your time horizon, job stability and dependants and your willingness to take risk refers to how much loss you can handle.

To find out what risk profile you fit into, you can ask yourself these questions:

1) When would you like to withdraw your money?
2) Are you investing to grow or protect wealth?
3) What is your required growth?
4) How much loss can you tolerate?
5) Do you understand the investment?
6) Do you want capital growth or passive income?
7) How old are you?
8) Do you have dependants?
9) Will your income grow or reduce in the future?

Based on these questions, you will fall into one of the following risk profiles 

Low risk, low-medium risk, medium risk, medium-high risk, high risk, and super high-risk.

Can you match yourself with one of these risk profiles?

Suggested asset allocation for each risk profile
This is not financial advice. This is just a guideline that investors can follow.

Low-risk asset allocation
Shares- 35%
Cash- 10%
Bonds- 20%
Real estate- 25%
Cryptocurrency- 0%
Commodities- 10%

Low-medium risk asset allocation
Shares- 35%
Cash- 5%
Bonds- 15%
Real estate- 30%
Cryptocurrency- 2%

Medium risk asset allocation
Shares- 50%
Cash- 5%
Bonds- 10%
Real estate- 35%
Cryptocurrency- 5%
Commodities- 5%

Medium-high risk asset allocation
Shares- 65%
Cash- 5%
Bonds- 0%
Real estate- 20%
Cryptocurrency- 5%
Commodities- 5%

High-risk asset allocation
Shares- 70%
Cash- 0%
Bonds- 0%
Real Estate- 15%
Cryptocurrency-10%
Commodities- 5%

Super high-risk asset allocation
Shares- 70%
Cash- 0%
Bonds- 0%
Real estate- 10%
Cryptocurrency- 20%
Commodities- 0%