The chart below shows the target asset allocation for each investor profile and a corresponding description. The investor profiles do not consider alternative investment exposure. An individual’s profile as an investor can depend on several criteria including:
The goal and its time frame
Investors who have multiple goals often are willing to take more risk with some goals than with others. Generally, a critical goal or an objective that has a time frame of less than three years may dictate a conservative investing approach. Less critical goals or objectives with time horizons of more than three years may allow for a more aggressive investing approach, because there is generally time recover from market downturns.
Some people’s personalities are simply geared toward lesser or greater risk taking.
Income and asset base
The larger your income and asset base, the more risk you may be willing to take, at least for some subset of your investments. This is because you have a greater ability to recover from investments that may not perform as expected. Conversely, some investors with a large asset base may feel more comfortable with a more conservative approach, knowing they do not need to take on additional risk in order to meet their goals.