Are you a risk-taker?
Feeling safe and comfortable with your investments and financial plan is really about risk. Understanding your tolerance for risk is essential in crafting and adjusting that plan as markets yo-yo up and down. Hunches and gut feelings aren’t enough. We have a better way.
Riskalyze is a transformative investment tool that allows us to objectively pinpoint your risk tolerance, then calculate the Risk Number™ of a given portfolio to help match it to your risk preference. It's built on decades' worth of behavioral economic studies culminating in prospect theory, the leading economic theory of risk-reward decision-making that won the Nobel Prize for Economics in 2002.
Consider the typical investing patterns we see year after year: When the market is up, we feel positive and excited, so we buy. When the market is down, we feel negative and fearful, so we sell. Of course buying high and selling low is logically the wrong approach to take with investing — but we see it over and over again. The issue is that it is difficult for people to ignore fear.
Riskalyze lets us quantify the amount of risk any given client is comfortable taking up front. Then, we can take fear out of the equation by investing within the bounds of the risk you can actually handle, so you can stay invested comfortably for the long term and reap those rewards
Rather than basing risk tolerance on age, time horizon and "gut" (the traditional strategy), Riskalyze offers a series of questions that determine when you prefer risk and when you prefer certainty. The questions focus on the actual dollar amounts you have to invest, to accurately capture your Risk Number: the quantitative measure of risk based on your real investments rather than abstractions.
The strategy is not to beat human nature or time the markets. Rather, the ability to quantify your individual risk tolerance means we can quantify the suitability of any given portfolio, strategy or plan to best meet it. Riskalyze puts us in a better place to:
- Quantitatively pinpoint your risk tolerance
- Better meet your expectations for portfolio returns
- More accurately match portfolios to your risk tolerance
- Demonstrate how individual risk tolerance will impact your specific financial goals
- Respond to market shifts more appropriately over time
