The age associated with the stages will be different for each person, but it gives something to work from.

The risk you take will depend on your financial goals, where you are in your current personal life, your accumulation phase, and circumstances. We can draw the following theoretical stages in a person's life:

a. The Poor - challenging to plan for because of their inadequate capital resources

b. Comfortably Retired - who has provided well for his retirement

c. High Net Worth - has provided sufficient capital for his retirement phase twice your everyday living needs

d. Well-Planned middle age - in secure employment who has 15 to 20 years of working life

e. Just Married - newly married with family and mortgage

f. Starting out - young graduate with a good job and prospects and no dependents

If we take the two extremes, we see that those in category (a) should take no risk, as they cannot afford to lose any funds they may have. Those in category (f) can take on very high risk as they can always start over because they have many years left to grow their portfolio. The risk gets evenly distributed across the other categories.

Most investment funds will categorise investors in one of the following categories.

1. Secure/Defensive - This portfolio focuses entirely on capital preservation. Align with (a & b) Thus cannot afford to take any risk.

2. Conservative - The Conservative risk profile is designed for investors with a minimum three-year timeframe or those who seek a diversified portfolio of interest-bearing and growth asset classes, emphasising interest-bearing assets. Align with (b) Can afford to take the minor risk.

3. Balanced - The Balanced risk profile is designed for investors with a minimum five-year timeframe. Align with (c) Can take an average amount of risk.

4. Growth/Assertive - The Growth risk profile is designed for investors with a minimum seven-year timeframe or those willing to accept higher levels of investment value volatility. Align with (d) Can take a reasonable risk in return for higher growth.

5. High Growth/Aggressive - The High Growth risk profile is designed for investors with a minimum nine-year timeframe or those willing to accept high levels of investment value volatility in return for high potential investment performance. Align with (e & f) Can afford to take a well-above-average risk for higher growth.

Observe that there is no exact alignment.

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