She's On The Money - Caution! Listen at your own risk (profile)

Episode Date: March 9, 2021

What is a risk profile and why does Victoria insist we know what's ours is before we invest? Today we reveal all. Plus, we unpack the relationship between risk and return and we break down the traits of each risk profile, so you can figure out exactly what yours is.Joining you this Wednesday is Victoria Devine and everybody’s favourite human, Georgia King.Do you love the podcast SICK and want more SOTM? Course ya do. Join our Facebook page to share your money wins and money confessions, follow us on Insta for daily inspo to keep you on track and DEFINITELY subscribe to our newsletter https://www.shesonthemoney.com.au/newsletter the written recap of the pod's key takeaways, including some bonus bits you won't want to miss.Finally, if you're in a money mess and need help untangling the muddle - we've got you sorted - simply record your question and send it through to us at [e-mail] and you may just end up on the podcast!The advice shared on She’s on The Money is general in nature and does not consider your individual circumstances. She’s on The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Australia Pacific Funds Management Proprietary Limited ABN 34 132 463 257 - AFSL 339151.See omnystudio.com/listener for privacy information.

She's on the money. She's on the money. Hello and welcome to She's on the money, the podcast for millennials who want financial freedom. Now today we're chatting risk profiles. They're those things you've heard us talk about thousands of times on the podcast before, particularly when discussing investing V, especially when they go hand in hand. So if you've always wondered what a risk profile actually is and want to know where you fall on

the risk scale, then today's show is the perfect place to start. It is, it really is. Can't wait for it. I'm actually so excited. You're excited, I'm excited. Now, if you don't know, my name is Georgia King. I'm a copywriter and journalism student and joining me as she does every Wednesday morning is financial advisor Miss Victoria Devine Fee. G'day. Hello G King. You're usually far more complimentary like I usually get like a glitzy glamoury introduction but today I just got yeah so she's a financial advisor. Did I do Melbourne based? Sometimes I throw that in just for geographical context. You know what it'll do. It'll do. Moving on. Fee, talk us through what we are actually going to be covering in today's episode. Well I'm really excited about this episode namely

because I always talk about risk profiles but I've never told you what a risk profile is so today we're going to be covering the A to Z of what a risk profile is and I'm going to tell you the six different types of risk profile there are. I'm going to tell you how to identify which categories you fall into and I'm going to tell you exactly why knowing your risk profile is arguably the most important step in investing. Can't wait. Yeah I knew you'd be excited and if you're not excited and listening on. Well, grab hold of your seat or your car seat or the legs you've got while you're on your walk. Like, I don't care. Strap in because things are about to heat up. Things are about to get risky. Let's start from the start. It makes sense. It's practical. What is a risk

profile? Okay. So before we even consider investing, we need to assess the setup. We need to understand the framework for how we're going to invest. A risk profile is basically our assessment of what kind of investments you're willing to take on and what ones you're not willing to take on and is going to be based on the level of risk you're happy to be exposed to. So this is going to be so different for every single person listening because not all of us have the same tenacity to take on risk but not all of us want the same things or even have the same financial background or the same types of assets to play with really. So we need to take into account your personal preferences and what kind of investor you are that's actually really really

important. If you take on a risk profile that you're not comfortable with, you're not going to be able to sleep well at night. If you can't sleep well at night, you're very likely to pull out of an investment at a time that is not good for you. And if you do that, you're putting future you at risk. So we need to just make sure everything is hunky dory. And I know that many people who have assets behind them to be able to operate as high risk investors, or they're willing to take that risk if they don't have heaps behind them, but also their personalities might be to take that on. So it can be a combination of what your financial position says you can take on in terms of risk, but also what you're comfortable with doing. So that's how we kind of figure it

out. Absolutely. And there are six different types of risk profile that we are going to cover today. They are capital stable, conservative, moderately conservative, moderate growth, growth, and high growth. And I'm going to go through them one by one. Which one do you want to start with, J. King? let's go capital stable oh that's arguably the most bland one but we we have to start somewhere i explain this literally each and every single week to clients that are coming on board i take them through a risk profile before i will even consider working with them so if you start to see a financial advisor this will actually be a part of the process so you'll go through what's called a fact find process and the advisor will be like hey g king nice to see you so here are all

these forms you need to fill in to tell me about your personal situation and here is your risk profile that you need to fill in to tell me what kind of investor you are and you'll be like oh well like i thought this was going to be easy and we're like no no no have some admin is that like a little questionnaire yeah it's a questionnaire it's very pretty very pretty document i mean it's a pretty document at zella because obviously aesthetics and everything my financial advisors don't actually care they're always like oh cool she changed again we have to use the most up-to-date one but you know i think it's beautiful and i think that people actually care about what their risk profiles look like oh for sure i'm not gonna do a questionnaire if it's not pretty

why would you capital stable though talk to me yeah look if you're a capital stable investor it means that you have a number of things going on right so you might choose that because you have little to no understanding of your investment risk profile or investing in general you might have a whole heap of cash and you're about to retire which means you have no interest in investing and being exposed to the share market because that would be risky and you don't actually want to lose any of your capital because that's a terrible idea especially if you're going into retirement. When you think of risks as an individual you might go oh my gosh that's so dangerous like I've got no interest like that really scares me I really don't want to have

any investments. A capital stable investor is your friend that only has a bank account with a moderate return like they weren't the friend that is chasing high returns in the share market they're the friend that just plugs away yep they're you georgia king ah the boring one that's what you said at the start look i i tried to put enough words between calling it bland and then calling it you but you're you right now because you don't invest and you just have money in a savings account like right now i would classify you as a capital stable investor because most of your assets are sitting in domestic cash i.e in your bank account someone who is a capital stable investor is someone who you know makes a financial decision and when they do they focus on the

potential loss it's like they're more likely to look at the negatives in a situation than what they can gain and they seek pretty basic returns they're not really looking towards taking on any risk because they genuinely are just a bit like that's a terrible idea i don't care how much you know about investment i don't care how good the upside is all i think about is the downside so i'ma just keep my money in the bank but there's there's nothing to say that you can't be a capital stable and then become, you know, a moderately conservative. No, no, absolutely not. It is all about education. And that is what we are learning today. It is absolutely not about just what is one size fits all. So someone who has capital stable, it's not a bad thing. It just means

that approximately and we're going to start talking about percentages, which is very hard to articulate in a podcast. But Jess is going to do an epic little, you know, I think she's going to do an instagram carousel post of all of the different risk profiles so that you can have a look and see what the percentages are so it makes a lot more sense to you and we are going to ensure that that's posted at about the same time so maybe whip out your phone right now and have a hot look at your instagram because it will be right there on hopefully your home page that's helpful if we've timed this well visuals are helpful if you're going back through our podcast and this happens to be a podcast that you're listening to hypothetically far into the future i'm sorry

you've missed the boat please scroll down on the instagram to find that content um but we'll have a little pie chart now the most important thing to remember about this pie chart apart from it being really ridiculously attractive um is that each and every single asset class is actually the same between risk profiles between risk profiles the thing that changes is the percentage of that asset you hold, not the percentage of, you know, different companies that you're investing in or different asset classes. So the cash inside a capital stable portfolio, for those of you playing along at home, is going to be about 65% of your portfolio. Whereas if we jump a little bit ahead to someone who has a growth portfolio or a high growth portfolio, they're going to have

five percent and three percent retrospectively oh so it's one of those things that it actually just that asset class becomes lower and the other asset classes increase so if you say invest a little bit of money into an ETF if you are a conservative investor what that might mean is you just invest a higher percentage which is why I say I am a high growth but conservative investor because when I say that what I mean is I want most of my money to be exposed to the share market I don't actually want to be holding any cash in a savings account I have my emergency fund and to be quite frank that's pretty much the only savings I personally have then have you know my cash hub and I've got money that comes in and out to pay for my life but I don't actually have a savings account to save for

anything because it's really empty after purchasing a home kind of sad but that is okay but most of my assets are now in one a really big mortgage but two they're in my share portfolio but my share portfolio will just increase in comparison and what I mean when I say I'm conservative is I'm not picking risky assets I would never and I'm not saying this because everybody should I'm saying this because me personally because I'm not willing to invest in risky assets like bitcoin cryptocurrency things that you know have just gone through an IPO like I'm I'm a little bit risk averse I want tried and true blue chip stocks that are going to make me feel safe and secure at night and that's what's inside my investment portfolio. I'm not actually investing in things that make me feel

uncomfortable. So you're basically saying that you have like a very low percentage of cash as in money in your savings accounts and most of your money is invested but it's invested in really safe places. Yes so if you made a pie chart for Victoria Devine hers would say that she's a high growth investor and that you know most of her assets are split between domestic equity and international equity which is a fancy way of saying Australian shares and shares from overseas so for me I think it's really important to preface that because I think people use words like oh risky or aggressive investors or high growth and you think oh that's actually a little bit intimidating. They're quite emotionally charged. Yeah I don't want to be an aggressive investor

like that's not me. An aggressive investor just means that most of your portfolio is made up of shares not cash. So capital stable summary of that is people who are either really worried about the share market and don't really want to invest or they're close to retirement and they want to maintain the capital that they've created over their lifetime and most of their assets are in cash that's capital stable let's move on now to talk about the conservative risk profile yeah so when you move into a conservative portfolio and a conservative risk profile you start to increase the amount of assets that you hold and you hold less cash conservative is going to introduce some more assets you're going to be looking at having now domestic equity as well as some

international equity not much but a little bit of international equity you'll be looking at things like domestic fixed interest which is again a really fancy way of saying a bond or a high interest rate term deposit you'll probably introduce something like property and when we say property in an investment portfolio we aren't talking about property as in hey georgia i've put this down in your conservative portfolio go buy an apartment because it needs to be you know it in your portfolio i'm actually talking about shares that you can buy in property assets so we're talking high-rise buildings in the melbourne cbd they're leased out right you buy shares in companies that hold those buildings and then you essentially have exposure to the property market

which is kind of cool yeah gotcha you can like own property without owning didn't know that was a thing yeah cool cool okay that is conservative conservative portfolios are again for people who a little bit worried maybe want to be a little bit more conservative they have a pretty basic understanding of the investment world when they think of risk they don't think it means danger but they also are pretty wary and when you make a financial decision you're more focused on the losses not on the gain so if I asked you the question hey Georgia um you've got a thousand dollars do you want to invest it you could make 11 percent you'd be like oh but what could I lose and I might go, oh, you could lose 11%.

You're like, no, thank you. I might just hold on to that and put my money in an asset that might make 4% or 5%. I'm more likely as a conservative investor to chase returns that are about 4% or 5%, not 11% or 12%, which a lot of more aggressive investors are probably looking towards. Moving on to moderately conservative. You're good at keeping me flowing.

I like it. So moderately conservative is, again, just increasing the amount of assets that you hold. So you're probably a little bit more prepared to establish a well-diversified portfolio that protects you from inflation and tax. So that's something you need to take into consideration if you are young. Picking a capital stable portfolio that returns 2% isn't actually going to help you get ahead in terms of tax and inflation. You're actually going to end up going backwards.

good financial advisor is going to explain that to you and talk you through your risk profile and the positives and the negatives of it and what it might suit and who it's best for but it's really important to understand that when you think of risk you might be like oh it's a little bit uncertain i don't really know but you know you want to have some more shares going back to percentages around 40 45 percent of your total portfolio is going to be made up of shares you'll then have a larger portion. So we're talking about 20% of a domestic fixed interest asset. So essentially bonds and high interest rate term deposits, but then you'll also still have property. You will have some domestic property, international property. You're going to have some international fixed interest,

which is exciting. So international bonds, and you're also going to add in alternative assets, which is kind of cool, kind of different. I'm surprised to see that they only have 20% of domestic cash so money in the bank but they're still only considered to be moderately conservative you need to remember that it might be 20 cash so if you break it down a thousand dollar investment portfolio two hundred dollars if that would be in your pocket it would just be in cash when i say in your pocket i don't mean hey you actually retain that often it's put into a bank account on your behalf that makes up your your investment portfolio but then you also if you're looking at that pie chart you can see domestic fixed interest so that's a bond so another 20% is actually

sitting in a very conservative asset that is only going to return maybe like three or four percent so when you think about a moderately conservative portfolio Georgia we are actually looking at something a little bit more diversified so when I say diversified I mean there's just a lot more colors on it there's more options it doesn't mean it's a better diversified portfolio because these risk profiles have different amounts of diversification allocated to them based on your risk profile so i i feel like i'm talking really quickly today so i do apologize but i'm just really excited about this but essentially you will be allocated a certain percentage so if you were a moderately conservative investor you'd be allocated this pie chart and then your financial

advisor would allocate investments in line with your risk profile which means they would then go hey georgia well for the 21 domestic equity or bonds that you're meant to be holding we recommend these options so then you would make up an investment portfolio with that amount of that asset in your portfolio as opposed to just filling in the pie chart but moving on to the next risk profile georgia from memory what is it it is moderate growth but like what's moderate growth what is moderate growth it's like putting one sugar in your tea maybe a little bit good but like you didn't need sugar slightly sweet but naughty i don't know i don't know let's let's talk about it and then find out what do you tell me about moderate all right and then you're gonna

by the end of me explaining moderate growth you're gonna have a better label for it challenge accepted okay cool so when you are a moderate growth investor you're going to be looking at adapting a more diversified portfolio to somewhat protect you from inflation and tax more so than the other one because you're going to be chasing a little bit higher of a risk you have a pretty reasonable understanding of what the investment markets do and the way they operate and how they flow you might have been dabbling a little bit in investments yourself like you've probably used a micro investing platform before or you've even bought your own etf or you you know you've had a shot you've had a try when you think about risk you're thinking possibilities you're not really

thinking about the negatives you're going yeah i understand the negatives i get that they exist but I'm more interested in the possibilities of investing my money and when you personally make a financial decision you are far more focused on the possible gains but you're also kind of still thinking about the possible losses because you're a little bit conservative you're not like ah all in boots and all you're just like you know what let's be reasonable about it I reckon moderate growth is pretty pragmatic yeah like her name's Sandra she lives in Sandringham she's like I just made that up see I told you I'm not creative that's good all right but someone who is a moderate growth portfolio is going to accept that there is some level of volatility and risk in

investing volatility another word it's going to be in my glossary of my book because I wrote the glossary yesterday which was very exciting that's helpful volatility essentially just means when the stock price goes up and down it's when a price fluctuates full stop like I don't know why we use these complicated words. It's just not necessary. No, they're definitely not. So to restart that, guys, what I mean is you can accept that stock prices go up and down over time. That's much more interesting. Well, it's easier. It's easier to understand. Easier. That's what we're here for. And you are a moderate risk taker in life and you can accept that there is some level of risk involved in investing, but it's not, you know, too risky. Again, talking about percentages,

I want you to visualize this. Hold your hands out in front of you. Have a pie chart and then select 23% of that hand pie chart that's going to be domestic equity so Australian shares and then 27% is going to be international equity which is international shares which is very exciting. You're going to have 15% fixed interest so 15% of that portfolio is going to be bonds. You're going to have some international property in there now which is very exciting. Your alternative assets are going to be about 5% which is more than what the last portfolio was and you are going to have some international bonds as well which is very exciting well diversified you're seeing the percentages come down in this portfolio as you go towards the middle of the risk profiles they

become a lot more even and at the end they kind of skew you would have noticed that the capital growth had some bigger percentages like 65 cash and you can expect the same thing to happen at the other end of the spectrum when someone's a growth investor or a high growth investor they're going to hold more shares and quote riskier assets than someone who wants to be a little bit more stable okay can I ask you potentially a silly dumb dumb question can you please stop saying they're silly dumb dumb I don't know that I've ever said that no but you haven't but you always preface it with like oh my gosh I probably should know this I'm just nervous well I don't know co-host of a finance podcast for a year and a half um what you're talking about here with all

of the percentages is this like a financial investment across australia official way of doing it or is this the victoria divine oh no this is the legit way of doing it like unfortunately there is no victoria divine way of risk profiling i wasn't sure because they wouldn't meet compliance right at the end of each podcast we say that i actually am authorized representative of australian pacific funds management for proprietary limited i won't go through that right now because you guys i don't know why you do but most of you sit through the hash um but because i am legitimate i have to adhere to the standards that have been set by australia and the law so for me this this isn't victoria's it's a standardized standardized way across australia like the percentages do

differ from advisor to advisor and dealer group to deal group so deal group is like the person who owns the financial services license that then licensed financial advisors and it might differ depending on what types of portfolios are being made up but this is pretty stock standard and when you look at your superannuation for example this is so applicable when we talk about a balanced portfolio they're talking about a conservative portfolio so if you've listened to this and you go hey victoria like conservative that does not suit me at all my friend why is your investment in your superannuation conservative then they just said balanced which sounds a little bit more exciting because you think it's a little bit safer okay there you go yeah you're welcome

let's move on to growth now but not before i quickly give that a re a rebrand i'm gonna call it yeah what is the i'm going to call it gets it but but still a bit sweaty about risk do you like it yes i love it i love it gets it but people are gonna love as well the job i'm about to give you what and that is writing a blog post on the new improved yes names for risk profiles from she's on the money love it done you're welcome add it to the list okay talk to me about talk to me about growth all right growth growth portfolios tend to be where people our age sure just sit not heaps of us are actually high growth investors albeit we all say we want to be this is where you desire to have a broad spread of really good quality investments but predominantly growth so that you

can achieve growth over the long term because you personally understand that you'll be investing for more than 10 years so it makes sense to be investing in assets that are going to last that long you understand investment markets will fluctuate there'll be volatility georgia we're learning words today maybe we should have a word of the week every single week we all learn a new finance term volatility is that today someone please comment in our facebook group and tell me if you want that because I'll teach you finance words but it sounds really trite and you understand that there are different sectors and they perform differently and there are different levels of risk and income and growth associated with your investment platforms so when you personally

if you're a growth investor look at the the horizon for long-term investing you're looking at investing for a minimum of seven years so I would never expect someone who's like oh I've got three or four years to invest to be a growth investor because that's a silly thing to do because you don't have enough time to get a return it is too risky and when you as an individual think about making financial decisions or investing usually focus on the possible gains you're not so much worried about any losses you're more concerned about making sure you make the right decision over the long term because you know that there will be a positive return and in life you're more likely to take risks and you're just feeling a little bit more comfortable with taking

higher levels of investment risk. So that to me is a growth portfolio. Again, when we look at the very cute pie charts, you'll see again, the international shares and the Australian shares make up about 50% to 55% of the portfolio. Then you've got domestic fixed interest. So you've got bonds sitting at 15%. You've then got Australian fixed interest sitting at another, I think that's 10% and yeah, everything is becoming a little bit more. So remember how I said in the middle, you have less percentages and coming towards the end, like your growth portfolio, you're going to be more aggressive. You are going to expose your share portfolio to more shares than cash. So more risky assets, which means more shares, less bonds, less cash. But ultimately a higher return. Yes.

And we will be talking about the relationship between risk and return a little bit later on. Yeah, and that's something that I really, really want to talk about. Arguably, we probably should have flipped this episode on its head and talked about the relationship between risk and return before we even started about it. Too late now. We'll get there. Too late. We're not willing to fix it. Finish us off here, V, with a little chat about high growth.

So this is the highest growth of the risk profiles. You're excited. Thank you. So high growth. You'll notice the chart actually has less asset classes. Can you see that, Jiggy? we've gotten rid of the bonds we've gotten rid of the cash there's no cash there's no cash there's no bonds there's no fixed interest right it's made up of shares and other shares so we've

got 42 domestic shares and we have 41 international shares we have a little bit of international property we've got some domestic property and then we have alternative assets you're not going to be surprised but an alternative asset isn't a share it is not a bond not the usual it's also not cash okay it's alternative uh-huh it's also not that emo kid you went to school with different form of alternative but it is a relatively loose term so it can actually include a whole heap of things alternatives are used to explain an asset that doesn't really fit in any of those other categories so it could just be a little bit left field but it can be in some circumstances wine collections it could be antiques or coins it could be stamps it could be some types of different forms of

finance assets so like real estate or commodities or private equity so you might have purchased into a fund that promises a certain return but it is not a listed fund on the ASX that could be it it could also be hedge funds you would have heard of that I don't recommend them for anybody who is not a high growth investor and even then I've never recommended one to a client because they to be honest carry too much risk um and then it could be venture capitalist it could be cryptocurrency that would be an alternative asset albeit that is not an alternative asset i've ever put into one of my clients portfolios um i do think it is really important to understand what this is though because it does come up and people always flippantly say it but at the end of the day

it is something that is not a bond it is not a share and it could be a lot of things could be gold my friend oh sovereign hill have you been i have been to sovereign hill i think i went in grade four same yeah yeah well we didn't go to school together but yeah i did go gold panning beautiful stuff thank you a high growth portfolio or a high growth investor means that you are interested in capital growth and you are interested in accumulating more wealth more quickly relative to your investment time frame so you understand the cyclical nature of investments and accept that there is going to be a very high level of volatility in the value of your investments so somebody who is a high growth investor might one year see a 12 percent return and another year see

negative six or seven percent return but they have to be okay with that because over the long term the average return of their portfolio might be 11 so you might go okay cool well over my 10 year time frame I might see a couple of years that actually my portfolio has a negative return but in the grand scheme of things I actually end up over the long term better off. I just have to be emotionally okay with seeing my portfolio being negative and sitting down with my financial advisor and having them go, hey Georgia, so this year we've been working on A, B, C and D and as you would know your total return of your portfolio is actually negative seven. Like you've got to be okay with that does that make sense yep you say shooting your own heart it was a step it was a

step okay well I mean that would hurt me and that's because I am capital stable and I fear risk but also reward exactly which is why it's really important for you to understand this portfolio because if I then made the suggestion for you to take all of your cash that you've saved up and put in a high growth portfolio you'd be really uncomfortable with it you wouldn't be comfortable you wouldn't sleep it would be something that didn't make you feel like you're working towards the right things that's not a good place to be at all because if we are stressing ourselves that's a terrible terrible outcome so someone who is high growth is pretty experienced in investing like I would never see and I would never be comfortable with somebody coming on board

you know to my advice practice and going I'm higher growth and I go what's your experience they say absolutely nothing i've never had any experience in any asset class and i go okay cool what's a share they're like victoria i've got no idea i don't know i'm ready but i am here and i'm ready and i'll be like probably not my friend okay so for me you have to have had experience in most of the asset classes already you have to at least understand what a share is and probably have been working at it so i do have clients who are high growth who have just come off micro investing platforms we're not talking about people who just invest in exotic asset classes or art collections or luxury car collections or whatever we're not talking about that we're just saying you need to

fully understand the market and you know what micro investing platforms if you need can teach you that so somebody who is investing as a high growth investor will be investing for the long term so we are talking minimum seven years like that is minimum seven years of not taking your money out. Ideally, it's 30 plus years because we are actually investing for retirement. We are investing to create financial freedom. And unfortunately, that usually can't be done in seven years. So I do apologize. I wish there was a get-rich-quick scheme that I could hook you all up with. Bitcoin, baby. Yeah, but we could do Bitcoin. We could probably start an MLM, but like none of those actually align to our values. No, they don't. How much does that suck?

just going to recap before we quickly go to a break so it's okay she wants a break for me i get it in the from the levels of low risk to high risk and return based on that as well so low return to high return we have capital stable coming in at the lowest form of risk then we have so the lowest form of return correct then then it goes up to conservative then we have moderately conservative moderate growth growth and then we finish off with high growth so hopefully our little chat today has helped you kind of figure out where you sit in that space we will be back after a very short break where we will chat about what to do if your risk profile doesn't quite match up with our investment preferences and we will be chatting about that very important relationship between

risk and return okay me let's go back to the start where it all should have began and chat about risk and return the concept of risk and return it pretty much says that where there is a very low level of risk taken a low return will follow and vice versa so if you are taking a higher level of risk the probability of you getting a high return, bit more risky. So we've got to be aware of that. So over the long term, there is great volatility, but at the same time, you are more likely to have positive returns. So cash is arguably the lowest risk and the lowest return asset that we can hold. Then you've got fixed interest and bonds, which is the next level up. So a little bit more return,

a little bit more risk then you would have property again more return more risk then you have Australian shares and then after Australian shares pretty much sitting together but has a higher level of volatility so their share prices fluctuate a lot more is international shares because they have higher return but also a higher level of risk and that is why we need to understand what that risk return trade-off is because we compromise something when we want something else So when I say that, I mean, you want to purchase a share because you actually want that level of risk. So you're compromising your financial stability and your security, which is why then we want to invest over the long term, because that then takes that risk away. Not completely, obviously, but it lowers that level of risk.

And so does diversification. So holding a lot of different shares as opposed to just one so that if one share completely plummets, you don't actually feel it as much because you have a lot of different options in your portfolio. Does that make sense? Perfectly explained. Thank you. And that's why I know a lot of people in our community ask about wanting to invest for like two years, but they have the big goal of buying a house. Yes, and that is why I don't recommend investing for the short term. obviously chasing a gain is going to put you in a position where you are at risk and that risk is

not worth it in my opinion and for those of you who are considering and this is just like a little hot tip those of you who are considering investing over a short period of time because you've got a house deposit first things first have you considered the first home super savers game if not why not because that is essentially free money from the government all right my last question for today's episode b is what we are meant to do if our risk profile doesn't match our investment preferences you can change your risk profile i say this at the office so you go through this entire fancy questionnaire and it pops out with a hey victoria you're a conservative investor you can go oh no no no sir and you can actually change it you will have to sign a form

to say no i actually don't want that risk profile that's been allocated to me based on your silly little survey Victoria Devine I actually want to be a growth investor you will be able to change it you just have to justify it and say no I want to change it but at the end of the day it is definitely worth considering why you answered those questions in a certain way because if you're saying oh no I want something else it's like well do you actually fully understand those because it's come out that maybe you do not all right to help you guys figure out exactly where you fall in terms of risk we will be putting together a little risk profile quiz that i'm actually just going to give you guys the ones i use in my business i'll just brand it pink how about that stunning perfect

before we wrap though let's do a quick recap so a risk profile is essential it really is that first step in figuring out uh how we will invest it's going to govern how we do it what we're investing in etc etc there are six profiles six risk profiles capital stable conservative moderately conservative moderate growth growth and high growth and those were ordered from least risky to most risky and finally we learned about the relationship between risk and return establishing that the riskier the share the higher the potential return and vice versa v i think that is all we have time for today almost all we have time for g just before we head off we'd like to acknowledge and pay respects to australia's aboriginal and torres strait islander peoples the traditional

custodians of the lands the waterways and the skies all across australia we thank you for sharing and for caring on the land which we are able to learn we pay our respects to elders past and present and we share our friendship and our kindness and please remember friends that the advice shared on she's on the money is general in nature and does not consider your individual circumstances she's on the money exists purely for educational purposes and should not be relied upon to make an investment or a financial decision and we promise victoria divine is an authorized representative of australia pacific funds management propriety limited abn 34132463257 afsl 339151 and a big thank you to the dream team of beck ryan and jess for helping us put together

today's show we literally would have not our heads screwed on without them we wouldn't and we'd probably talk for hours oh my gosh we've already been talking for a very long time so good luck editing this one guys see you next week bye guys