Portfolio Personalization

Experience has taught us that individual Investors are not created equally. Each investor views financial risk through their own unique lens, which is significantly influenced by their investing history. Every investor has a unique personal risk score, also known as a risk number – as does each investment portfolio. Successfully aligning a portfolio risk number with a personal risk number, often leads to greater confidence and the ability to stay invested through all types of market conditions.

Being mindful of the factors that drive financial decisions can increase the probability of long-term success. When defining and evaluating personal risk preferences, Tolerance for risk vs. Capacity for risk is an important distinction. Simply put, one is the amount of financial risk an individual might want to take, while the other is the amount of risk he or she is capable of accepting. Specifically, Risk Tolerance is the emotional or psychological willingness to take risk, while Risk Capacity is the ability to take risk, without jeopardizing the ability to achieve specific financial goals.