Starlight Portfolios first identifies your risk profile before providing any portfolio recommendations. The profile is built based on your answers to the risk tolerance questionnaire. Risk tolerance is commonly defined as the degree of investment return variability that an investor is willing to bear. Risk tolerance identifies how an investor reacts to potential market changes within the context of their investments. This risk tolerance profile is not absolute, as you may have a different risk tolerance associated with different investments. For instance, a comparison of an investor’s risk tolerance for an investment geared towards saving for a vacation could be drastically different than that for retirement. As the time horizon, amount to be saved, and many other factors are taken into account and influence the overall tolerance measurement.
We assign risk profiles based on the answers provided in our risk tolerance questionnaire process (identified below). The process of calculation begins with the value assigned to each answer, which is then applied to our algorithm to calculate your risk tolerance profile. For more about risk tolerance profiles, please visit our Risk Tolerance Profiles page.
Here’s an overview of our process of risk tolerance identification, via the online questionnaire: