Risk Profile – Growth Investor

Growth Investor Risk Profile – Maximise Returns with Smart Investment Choices

Q: What is the risk profile for investors?

An investment risk profile helps determine how much risk an investor can comfortably take while pursuing their financial goals. It assesses factors like investment horizon, income stability, and risk tolerance to create the right asset allocation based on your risk profile. Understanding your investor profile ensures your strategy aligns with your comfort level and goals.

Q: What is the 70/30 rule in investing?

The 70/30 rule in investing refers to allocating 70% of your funds to growth-oriented assets like stocks and 30% to conservative assets such as bonds or cash. This approach helps balance risk and reward, aligning with your growth risk profile and overall investment profile for long-term stability and returns.

Q: What is a growth risk profile?

A growth risk profile suits investors who are comfortable with higher short-term volatility for potentially greater long-term gains. It typically involves a higher allocation to equities and lower to fixed-income assets. This type of investor profile focuses on high growth risk profiles aimed at wealth accumulation over time.

Q: What is the 7% rule in investing?

The 7% rule in investing suggests aiming for an average annual return of around 7% over time. This benchmark is often used in growth investment profiles to set realistic expectations. Actual results depend on your investment risk profile, market conditions, and diversification strategy.

Q: What are the five types of risk profiles?

The five common risk profiles for investors include: Conservative – Low risk, prioritising capital preservation. Moderately Conservative – Slightly higher risk with steady growth. Balanced – Equal mix of risk and return. Growth – Higher risk for long-term wealth. High Growth – Aggressive investment profile aiming for maximum returns. Understanding your asset allocation based on risk profile ensures your portfolio matches your goals and comfort level.

The investment objective of a Growth investor is to place an emphasis on long term growth with a modest income stream.

A Growth portfolio looks to invest around 85% in growth assets (eg equities and property) and the remainder in defensive assets (eg cash and fixed income). The figure of 85% is a general benchmark; actual allocations over time will vary around this as investment conditions change and investment managers take opportunities to improve returns.

This portfolio suits investors who are willing to accept high levels of investment value volatility in return for high potential investment performance. The higher exposure to growth assets means that capital stability is only a minor concern.

Such a portfolio is suitable for investors with a long term investment time frame. It is important to note that the value of your capital can move up and down over time, particularly in shorter time spans. Hence these investments should be considered with a minimum timeframe of 5 years.

Leading Advice is a trusted Financial Planner in Sydney, helping individuals and families make informed financial decisions. Our experienced Financial Advisor team supports clients with tailored plans for retirement, family goals, and long-term financial security.

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Investment objectives – Growth
Minimum investment period	5 years
Returns
Forecast average annual return over 10 years	7.2%
Risk
Probability of a negative return over a single year	20.8%
Expected negative years out of 20	4.2
Forecast rate of returns
1 year	-9.5% to 28.9%
5 years (per annum)	-0.4% to 14.9%
10 years (per annum)	1.9% to 12.5%
20 years (per annum)	4.4% to 11.6%

Asset allocation – Growth	Target %	Minimum %	Maximum %
Defensive Fixed Income	4	0	20
Defensive Alternatives	8	0	25
Cash	3	0	15
Total defensive	15	5	25
Australian Equities	31	20	60
Global Equities	37	20	60
Property & Infrastructure	7	0	30
Growth Alternatives	10	0	20
Total growth	85	75	95

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Investment Risk Profile – Understand Your Growth Risk Profile for Smarter Investing

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