"Knowledge Plus for Wealth + " will give you the overview of the recent happenings in the financial market.
It is important to invest keeping in mind the risk profile of an individual which will help to ensure suitability of asset class in your portfolio.
In this issue, we will cover:
- Latest Happenings in the Financial Markets
- Introduction to Risk Profiling
- Understanding Risk Tolerance Level & Risk Taking Capacity
- Various Types of Asset Class Risk
- Different Tools to Measure Risk
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http://www.youtube.com/watch?v=fPbwetwPlnA
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3. Last week at the Financial Markets!!!
• SENSEX rose by 462 points (2.40%) and closed to 19732 at end of the
week.
• (FIIs) remained net buyer in equity with net inflow of Rs. 5490 crore and
net seller in debt segment with net outflow of 2071.5 crore.
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News Impact
• India’s trade deficit for the month of
August narrowed to $10.9 billion
against $12.26 billion in July 2013.
• Lower trade deficit will lead to higher
GDP growth
• Volatility in rupee may reduce.
• Economy downgrade fear will reduce
• TRAI recommends big cut in base
price for upcoming 2G auctions
• Profit margin may improve of
telecom operators.
• Voice and data charges may not
increased as cost of spectrum will
reduce.
4. Last week at the Financial Markets!!!
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Price Performance of Different Asset Class Better than expected
Chinese economy data
and reduce tension in
Syria shows profit
booking in Gold & Silver.
Better than expected
Chinese economy data
and reduce tension in
Syria shows profit
booking in Gold & Silver.
5. Next Week in the Financial Markets...?
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• Wholesale price Index (WPI) data for the month of August 2013 will be
released on September 16, 2013
• Federal Open Market Committee (FOMC) meeting is scheduled on 17th
& 18th
September, 2013. The committee would provide an indication on
the timing and size of the Fed's cutbacks in its bond-purchase program.
• Reserve Bank of India (RBI) will release its next mid-quarter monetary
policy review, on September 20, 2013
7. Introduction
• Risk profiling is one of the most important part of the
investment process.
• It plays an essential role in ensuring the suitability of asset class
in your portfolio.
• Risk profiling generally revolve around two questions:
1. "How much risk can you handle psychologically?"
2. "How much risk should you ideally take on?”
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8. Introduction
These question reflects 2 important aspects of risk profiling:
1. Risk Tolerance (Emotional/Psychological Aspect)
2. Ability to take Risk (Financial Aspect)
Answers to both the above questions may not necessarily be the
same
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9. Risk Tolerance
• Risk tolerance is a measure of your willingness to accept higher
risk or volatility.
• Those with high tolerance are aggressive investors, willing to
accept losing their capital in search for higher returns and vice
versa
• There is also an emotional aspect attached to it. An investor may
have a high risk tolerance. But when actually the event occurs
and he sees his portfolio significantly down he may not be willing
to accept it.
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10. Risk Tolerance
• An individual should have a realistic understanding of his or her
ability and willingness to stomach large swings in the value of
his or her investments.
• Risk tolerance is a measure of how much risk you can handle,
but that is not necessarily the same as the appropriate amount
of risk you should take.
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11. Risk Taking Ability
• Financial risk capacity can be measured in many different ways,
including time horizon, liquidity, income etc.
• Those with high income can make higher-risk investments as fall
in the amount of their portfolios will not make much difference
to their finances.
• An investor may have high risk tolerance but if a small drop in
value affects his monthly budget, then his risk taking ability is
considered to be low.
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12. Asset Class Risk
• Every asset class (Safe or Risky) comes with its own set of risk
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• Equity Market Risk
• Corporate Event Risk (Bonus, Split)
• Small Firm Risk
• Hedging Demand Risk(International Investment)
• Complexity or Efficiency Risk
• Liquidity Risk
• Interest Rate Risk
• Credit Risk
• Forex Risk
• Extreme Event (War, natural ca)
• Operational Risk (System failure)
• Regulatory Risk
14. Knowledge Plus for Wealth +
Research Desk
@
VALUE PLUS - The Family Office
Office: (0265 -2324600,6629800)
Email: info@valueplusinv.com
Website: www.valueplusinv.com