This Risk Profiling is being done as per the RULE 16 of INVESTMENT ADVISOR RULES 2013.
Client shall provide true information for the Risk Profiling. Investment Advisor shall not be responsible for any false information provided by client.
Important Investing Information to Consider before Subscribing With capital Builder Financial Services
This booklet will help us understand your tolerance to risk and determine an appropriate risk profile. By asking certain questions, we will identify you as one of the following investor types:
Understanding, identifying and agreeing on your risk profile is a critical step in designing the right investing strategy to meet your goals and objectives while taking into account your tolerance to risk.
Risks Associated with Investing
There are various risks associated with all investments. These include: inflation, volatility and market risk, specific risk and legislative risk.
The real purchasing power of your money may not keep pace with inflation. Inflation is an important consideration for all investors. If the after tax return on your investments is less than the rate of inflation, then the buying power of your money will decline.
Volatility and Market Risk
Movements in the market mean that the value of your investment can go down as well as up, sometimes suddenly (volatility). Different types of investments experience different levels of volatility. Volatility becomes a problem if you do not have the timeframe to withstand the rough patches.
Specific risk refers to those risks related to a specific company. For example, a fall in the profit performance of a company may impact adversely on its share price. This in turn, is likely to affect the value of its securities.
Your investment strategy could be affected by changes in the current laws and regulations
What is the Relationship between Risk and Return?
Risk and return are positively correlated. In real terms this means, the higher the risk associated with an investment, the higher the expected return and vice versa.
This relationship is called the “Risk vs. Return ratio” (see chart below) and is a factor that is taken into consideration in defining your tolerance to risk. Investments such as shares may offer higher returns over the longer term, but there is a greater inherent risk. In contrast, cash and fixed interest investments are considered to be less risky, but offer lower returns.
The relationship between risk and return in different asset classes is illustrated in this graph.
Managing Risk in Investing Diversification
The most widely recognized method for managing portfolio risk is through diversification of investments and investment management. In order to minimize the volatility and risk of your investment portfolio, it is prudent to ensure that it is sufficiently diversified against overexposure to a single asset, asset sector, geographical region or investment manager. This is because no one asset, asset class, geographical region or investment manager provides the best performance over all time periods. A range of investments should reduce the risk of the portfolio experiencing drops in performance across the board simultaneously, as one asset class or manager may perform well to counter the poor performance of another.
1. Capital Market-Derivative Segment 5. Initial Public Offerings