What you need to know

before Investing

BEFORE INVESTING

WHAT ARE EXAMPLES OF LONG TERM FINANCIAL GOALS?

Example 1: Preservation of capital

  • This financial goal is essentially aimed at preserving the capital that has already been accumulated. One can, for example, aim for a return target of around 2% per year.
  • This goal is closely associated with the conservative profile.

Example 2: Protection against inflation and/or depreciation of the currency

  • This financial goal aims to protect capital in terms of purchasing power over time. The aim is to reduce the negative effects of inflation and/or the depreciation of the currency. One can, for example, aim for a return target of 3 to 5% per year.
  • This goal is closely associated with the moderate profile.


Example 3: Passive income

  • This financial goal is aimed at obtaining passive income, ie. the periodic payment of dividends, from the invested capital. One can, for example, look for a target of 0.40% per month, similar to the returns on real estate rentals.
  • This goal is closely associated with the conservative profile.


Example 4: Monetizing capital

This financial goal aims to invest your money to make it profitable. In other words, put your money to work for you. For example, you can set an average return expectation from 8 to 12% per year.


WHAT ARE THE INVESTOR PROFILES?

Conservative

The conservative investor is very risk-averse, as he/she cannot see the portfolio balance being less than the amount invested. The conservative investor will invest in financial assets considered very safe, such as bonds, real estate, term deposits or private pension plans.

Just as an example, in the worldwide crash of the stock exchanges during the Coronavirus pandemic, the conservative investor was "grateful" for not having investments in variable income (eg. stock market).
 

Moderate

The moderate investor accepts a low exposure to the risks (and returns) of the financial market, even though this represents having (slight) declines in the amount invested. It tends to invest in fixed income financial assets (such as treasury bond or bills) or even a not-so-large amount in variable income: stocks, mutual funds, ETFs and real estate funds.

Just as an example, in the worldwide crash of stock exchanges in March 2020, the moderate investor probably despaired a lot when the portfolio balance dropped considerably and eventually sold the assets invested on the stock market at a loss.
 

Aggressive

The aggressive investor lives well with a greater exposure to the risks (and potentially greater returns) of the financial market, even though this represents significant dropdowns in the invested capital. The aggressive investor will invest mainly in variable income financial assets both locally and overseas, such as shares, real estate funds, ETFs and cryptocurrencies.

Just as an example, in the worldwide crash of stock exchanges in March 2020, the aggressive investor probably was concerned about seeing the portolio balance dropping considerably, but remained invested and even took the opportunity to buy even more assets on the stock market.

Investor Profile Questionnaire

Investor Profile Questionnaire

What do I consider my investor profile:

I don't know
Conservative
Moderate
Aggressive

Financial goals:

Preserve capital
Protect against inflation
Generate passive income
Grow capital

Financial situation:

I have significant debts
I don't have out-of-control debts and/or I have little wealth
I don't have debts and/or I have significant wealth

Experience with investments:

I don't know / Only savings
Fixed income / I invest more in fixed income than variable
Only variable income

Time horizon:

Short term
Medium term
Long term

Risk tolerance:

Risk-averse
Tolerant of low risks
Tolerant of medium and high risks

Reaction to a market downturn:

Would sell positions
Would wait to decide
Would do nothing
Would buy more

WHO WE ARE:

TRENDSET Financial Education.www.trendsetconsulting.com/en
Hamilton, New Zealand
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