4. Key Needs of Financial Planning
Priority
Investment Risk Management
Objective
- To identify personal risk tolerance level
Purpose
- To avoid over exposure to risks
Principle
- Very low risk profiling with possible asset allocation (Equity: 0%-10%; Fixed Income and Money Market Instruments: 90%-100%).
- Low risk profiling with possible asset allocation (Equity: 10%-30%; Fixed Income and Money Market Instruments: 70%-90%).
- Medium risk profiling with possible asset allocation (Equity: 40%-60%; Fixed Income and Money Market Instruments: 40%-60%).
- High risk profiling with possible asset allocation (Equity: 70%-90%; Fixed Income and Money Market Instruments: 10%-30%).
- Very high risk profiling with possible asset allocation (Equity: 90%-100%; Fixed Income and Money Market Instruments: 0%-10%).
How to achieve?
- Avoid riskier assets if risk tolerance is low and time horizon is shorter.
Timeframe
- Short-term goal is to identify personal risk profiling within a year.
