What is your investment profile and why is it important?

Understanding your investment profile is one of the most important things we do as your investment adviser to help you reach your investing goals.

Your investment profile is determined by the following six areas: 

  1. Your goal
  2. Your risk profile 
  3. Your investing time horizon
  4. Your investing experience
  5. Your need for income; and 
  6. Whether you have any high interest debt.

Your responses to each of these areas will help determine what type of investor you are, and importantly, whether investing is appropriate for you right now. If we think investing is right, we’ll recommend a strategy that we believe is suited to helping you reach your goals.

Why is my investment profile important?

The six areas making up your investment profile help Stockspot to assess the level of risk you should be taking in order to give you the best chance of achieving your goals in your desired time horizon. As your adviser, Stockspot will rely on your investment profile to determine which one of our five portfolios is suited to you based on how much risk you should be taking. 

The way we manage risk in your portfolio is through asset allocation. Asset allocation is how much of your money is in growth investments (shares) and how much is in defensive investments (bonds and gold). Having more growth investments in your portfolio leads to higher risk (or fluctuations) but better long-term growth potential. Having more defensive investments in your portfolio provides better short-term stability but reduces the long-term growth potential of your portfolio. 

If you have a long-term investing goal, you may be able to take more risk as you have more time in the market to withstand share market ups and downs. We are likely to recommend one of our growth portfolios with a higher allocation to growth investments. However, money invested for shorter-term goals should be exposed to less risk. This is to ensure you have enough time to recover from a potential market downturn. In this example, we may recommend a balanced or conservative portfolio. 

A combination of all your responses will determine how much risk is appropriate for your circumstances and therefore which portfolio we recommend to you.

The Stockspot portfolios

PortfoliosGrowth (%)Defensive (%)
Amethyst – Conservative4060
Sapphire – Moderately Conservative5050
Turquoise – Balanced6040
Emerald – Growth7030
Topaz – High Growth7822

How do you work out my investing goal?

Your investing goal could be something quite specific, like saving for a house deposit or your kids’ education. Or it could be more arbitrary, like building wealth for the future. 

Once you start investing, you can update your goal at any time using the goal tracker tool available inside your dashboard. 

How do you work out my risk profile?

We ask you scenario based questions to help us understand your risk capacity and to what extent you can withstand volatility (ups and downs) in your portfolio. Some investors can stomach larger ups and downs in their portfolio (for the benefit of higher potential returns). Other investors are happier to see smaller ups and downs in their portfolio (even if it means sacrificing some returns along the way). 

Why is your investment time horizon important?

Your investment time horizon is important for determining how much risk you should be taking in your portfolio.

The shorter your investment time horizon, the less risk you should take. Stockspot clients with a time horizon of three to four years are best suited to the Amethyst or Sapphire portfolios.

If there is a larger market fall, you have less time in the market to recover from those temporary dips.

If you’re investing for the longer term, say five or more years, you have more time on your side to recover from any temporary dips in your portfolio, so you can be better suited to a balanced, growth or high growth portfolio, such as Turquoise, Emerald, or Topaz.

If you have a time horizon of less than 3 years, investing might not be right for you and your money is better placed in a high interest savings account or similar.

Why does it matter if I have high interest debt?

If you indicate you are paying down high interest debt, we’ll recommend you pay off the debt before you start investing. High interest debt, like credit cards, can charge as much as 20%. Expect these higher interest rates to be greater than the expected return in your first few years of investing. 

When should I change portfolios?

When any of your personal circumstances change, such as your financial circumstances, goals, investment time horizon or comfort with risk, you should review your investment profile to make sure it’s still appropriate for you.

Similarly, as you move through different stages of life and your desire for capital preservation versus capital growth changes, it’s also a good time to review your investment profile.

When isn’t it appropriate to change portfolios?

When markets rise or fall, it can be tempting to change your portfolio to chase the best performing Stockspot portfolio.

Changing your strategy for performance reasons alone can end up throwing you off track from reaching your goals.

When you change your portfolio it may lead to a portfolio rebalance which can lock in capital gains (or losses) and see you move to a portfolio that’s not suited to your risk profile and time horizon. 

If nothing has changed, our best best advice is to stick with your current portfolio and let Stockspot’s optimised rebalancing do the work, keeping your portfolio’s risk setting at the right level and sometimes harvesting profits for you.

Stockspot’s annual review process

Every July, we ask clients to review their investment profile so that we can capture any changes and check that your portfolio continues to be the best option for you.

Even if you think nothing has changed, the annual review process is a great opportunity to check-in on how you’re tracking with your investment journey and question if anything has (or could) change in the foreseeable future. 

Could you invest for longer? Could you set up another portfolio for a different goal? Could you increase your top-ups?

Don’t forget, our team of advisers are also on hand to help you work that out. 

Find out how Stockspot makes it easy to grow your wealth and invest in your future.

  • Chris Brycki

    Founder and CEO

    Chris has over 25 years of investment experience and spent most of his early career as a Portfolio Manager at UBS. Chris has been a member of the ASIC Digital Advisory Committee and volunteers as a member of the Investment Committee for the NSW Cancer Council. He holds a Bachelor of Commerce (Accounting/Finance Co-op Scholarship) from UNSW.

Founder and CEO

Chris has over 25 years of investment experience and spent most of his early career as a Portfolio Manager at UBS. Chris has been a member of the ASIC Digital Advisory Committee and volunteers as a member of the Investment Committee for the NSW Cancer Council. He holds a Bachelor of Commerce (Accounting/Finance Co-op Scholarship) from UNSW.

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