Understanding your risk profile and product risk rating

Understanding your risk profile and product risk rating

Personal finance is intertwined with emotions, which have to be addressed before investing. It is important to understand your risk appetite - how much risk you are willing to take, how prepared you are to lose part or all of your capital, and whether you have the ability to make good any losses incurred.

Your risk appetite is a measure of the amount of risk you are willing to take for potential returns. Some people have a high-risk appetite, and are willing to accept the possibility of losing a significant part, or all of what they have invested. There are also people who are unwilling to risk even a single dollar on an investment – it’s more crucial to them to protect their wealth, than to grow it.

It is important to select investments that match your risk appetite, for a few reasons:

  • You need to invest in a way that allows you to sleep soundly at night, as the risk is within your acceptable range.
  • Besides your psychological comfort, an investment must also match your capacity to accept any losses. The amount of risk you can manage depends on various factors, such as your investment horizon (i.e. how long you will remain invested).
  • Another factor that may influence your risk appetite includes your investment time frame. If you are looking to invest for a longer period time, you have time on your side to recoup any loss. If you are an investor with a shorter investment time frame, as you might be nearing retirement, investing in high-risk products are not for you.




Step #1: Understand your risk appetite

DBS Financial Needs Analysis helps you to understand your investment needs while aligning with changing market environment and regulatory requirements. With the results, you can identify your risk class.

DBS Risk Classes


 

Step #2: Look at the investment product risk class

Investment product risk class measures a product’s risk from a scale of P1 to P5, with P1 being the lowest, and P5 being the highest. Match your risk class to investment products that are a right fit to you, and decide which ones best complement your portfolio.

Your risk class

Corresponding investment product risk class for consideration

C1

P1

C2

P2 or below

C3

P3 or below

C4

P4 or below

C5

P5 or below (P5 as the highest risk class)

 


Risk Disclosure and Important Notice

The information herein is for information only. DBS accepts no liability whatsoever for any direct, indirect or consequential losses or damages arising from or in connection with the use or reliance of this publication or its contents

Investment involves risks. The information provided is based on sources which DBS Bank Ltd. and DBS Bank (Hong Kong) Limited believe to be reliable but has not been independently verified. Any projections and opinions expressed herein are expressed solely as general market commentary and do not constitute solicitation, recommendation, investment advice, or guaranteed return. The above information does not constitute any offer or solicitation of offer to subscribe, transact or redeem any investment product. Past performances are not indicative of future performances. You should make investment decisions based on your own investment objective and experience, financial situation and particular needs. You should carefully read the product offering documentation, the account terms and conditions and the product terms and conditions for detailed product information and risk factors prior to making any investment. If you have any doubt on this material or any product offering documentation, you should seek independent professional advice.

Securities trading is an investment. The prices of stocks fluctuate, sometimes dramatically. The price of a stock may move up or down and may become valueless. It is as likely that losses will be incurred rather than profits made as a result of trading stocks. The investment decision is yours but you should not invest in any stock unless you have taken into account that the relevant stock is suitable for you having regard to your financial situation, investment experience and investment objectives.

Customers should be aware that the prices of the Callable Bull / Bear Contracts and Warrants may fall in value as rapidly as they may rise and holders may sustain a total loss of their investment. DBS Bank (Hong Kong) Limited does not provide securities advisory service. Any person considering an investment should seek independent advice on the investment suitability when considered necessary.

Bonds are investment products and some of them may involve derivatives. The investment decision is yours but you should not invest in the bonds unless DBS Bank (Hong Kong) Limited who sells them to you has explained to you that the bonds are suitable for you having regard to your financial situation, investment experience and investment objectives.

Foreign exchange involves risk. Customers should note that foreign exchange may incur loss due to the fluctuation of exchange rate.

Funds are investment products. The investment decision is yours but you should not invest in the fund unless the intermediary who sells it to you has explained to you that the fund is suitable for you having regard to your financial situation, investment experience and investment objectives.

The information provided above have not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong.

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