Did you find this article useful?
As the saying goes, opportunities are reserved for the prepared. For investors, what does it mean by having sufficient preparation? The following five steps should help you identify your needs, decide the most suitable asset allocation, and lead you toward your financial goals step by step.
Making the first step right is crucial to the long road of investments. Of the five steps, the first is to assess your risk tolerance and decide the most suitable asset allocation for yourself.
Different people have different attitudes towards investment. Some are not willing to take any risks or withstand losses, and therefore would rather forgo potentially higher returns. Some are willing to take some risks but tend to avoid huge volatility. Some are willing to take risks in exchange for returns that outperform the markets.
How to gauge one’s risk tolerance? Look at your investment horizon. Put it simply, the longer your investment life, the higher the risk you can take because you can afford the time to last a cycle, which helps smooth out short term volatility. For instance, a young person just starts working, who is still far from retirement, can take more risk
On the contrary, the shorter the investment period, the lower the risk one can take. Assuming you are going to retire next year, and not receiving any regular income, you just do not have the time to recover all losses if your investments take a nosedive all of a sudden
Besides, your risk tolerance is dependent on your life goals. Ask yourself if you need to set aside funds for your children’s education? Are you going to buy a property in the near future?
These factors will have an impact on your cash flow . After all, we all need to reserve some cash at all times just in case there are emergencies.
source: HSBC Global Asset Management (HK) Ltd.
This document is prepared by or on behalf of HSBC UK Bank Plc (“HSBC”), 1 Centenary Square, Birmingham BI IHQ United Kingdom which is owned by HSBC Holdings plc. HSBC is incorporated under the laws of England and Wales with company registration number 9928412 and is authorised by the Prude ntial Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. This document is for general circulation and info rma tion purposes only. HSBC has prepared or arranged for the content of this document based on publicly available information at the time of preparation from sources it believes to be reliable but it has not independently verified such information. HSBC gives no guarantee, representation or warranty as to the accuracy, timeliness or completeness of this document or the information contained within it.
This document is not prepared with any particular customers or purposes in mind and does not take into account any investment objectives, financial situation or personal circumstances or needs of any particular customer. The contents of this document do not constitute investment, tax, accounting, legal or any other professional advice or any recommendation, nor is the intention of this document to sell investments or services or solicit purchases or subscriptions for them. You should not use or rely on this document in making any investment decision and HSBC is not responsible for such use or reliance by you. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. Investing does come with risks and there’s a chance you may not get back what you put in.
You should consult a professional adviser in your jurisdiction if you have any questions regarding the contents of this document or if you need any help making investment decisions. You should not reproduce or further distribute the contents of this document to any person or entity, whether in whole or in part, for any purpose. This document may not be distributed to any jurisdiction where its distribution is unlawful.
No part of this document may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of HSBC UK Bank plc.
Did you find this article useful?