What is an Investor Profile?

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  • Written By: Geri Terzo
  • Edited By: C. Wilborn
  • Last Modified Date: 15 October 2019
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An investor profile is a reflection of an investors goals and objectives. It defines how much risk someone is willing to accept and also the kinds of rewards or returns that he is expecting. Based on an this profile, an investor and a financial advisor can together determine where to allocate funds, because each asset class carries a different level of risk. An investor profile dictates how much capital goes to stocks, bonds, and other asset classes, and how much should remain in cash.

Certain criteria determine an investor's profile. Often, a financial advisor will ask a client to fill out an investor profile questionnaire. The purpose is to find out basic information such as the amount of money available to invest, when the funds will be needed, what the funds will be used for, and the age of an investor. An investor who is close to retirement, for example, will have a shorter investment time horizon than someone who is in their 20s or 30s.

The way an investor handles loss also plays into his investor profile. If a portfolio declines 20% in one year's time and the investor uses this as an opportunity to purchase additional securities, his tolerance for risk is high. If, however, he liquidates the portfolio and sells everything, there is a low risk tolerance.


An investor with a conservative investor profile takes on as little risk as possible. Returns in a conservative portfolio may be modest, but so is the chance for losing money. Someone with a moderate investor profile has a reasonable understanding of the stock market and is willing to take on some risk. An aggressive investor has advanced knowledge of the financial markets and is not afraid to make risky investments. He should expect the highest rates of return.

A portfolio will be divided based on investment objectives. Government bonds tend to be the safest investments if the underlying government does not tend to default on its debt. Corporate bonds can be risky because if a company defaults on a loan, certain investors may not be paid. A bellwether stock is an industry leader, and investors may feel safer with a company with proven historical returns. A risky stock is one with no proven track record or that has demonstrated signs of continued weakness in its price.


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