Investment risk for mid 30's

dilby

Hi all - My wife and I are looking to set up ISA accounts with Wealthify and they are asking for the typical risk level if you wish to take (starting my investment £7500 each). They have 5 levels, ranging from 'cautious' to 'adventurous'. They seem to have the best track record out of any of the robo investors, but don't publish their mix of investments for each level. It's really hard for me to google therefore, and I was just wondering if there was a general common practice for this, based on the fact we are in our mid 30's. I know it's entirely subjective and there's no right or wrong answer, but I'd be curious what the most common bracket for our age is; for example I know that your risk should go down over time, but from what I've read most people don't start investing until their mid 30's. So I'm not sure if that means I should really be looking to be as adventurous as possible, or most people might be in the middle ground at our age. Would just be curious to hear what people think is the most common practice here  so I at least now I'm not being too much of a mavrick- thanks! 

grumiofoundation

You can download factsheets here:

https://www.wealthify.com/why-invest/how-we-invest

In terms of what risk you ‘should’ take, more important that your age is your timescale/aims for the money (a 30 year old investing for 10years can take less risk than a 40 year old investing for 20 years). 

adam06_2

Up to you, if your the kind of person who poops them self If it goes down 30-50% and wants to pull your money out, then go lower risk.

 Personally id probably go for a fairly high risk of a 4 if I didn't need the money for the next 10 years or more. Then lower the risk as I get closer to needing it... But that's just me. 

wjr4

How long are you planning to keep it invested for? Do you have a sufficient emergency fund? How much risk are you taking with your pensions? 

GeoffTF

It is up to you. There are many more important factor than just your age. Some are born gamblers. Other like to play it safe. What is the point of a robo adviser if it does not help you make these decisions?

Thrugelmir

dilby said:

 for example I know that your risk should go down over time

Not so much that risk should reduce over time but that investment risk is higher over a shorter time frame. The one thing we ultimately share in common is limited time whatever our objective. How much capital you can afford to lose is a key consideration when deciding what overall level of risk to expose yourself too. 

Daliah

dilby said:

 They have 5 levels, ranging from 'cautious' to 'adventurous'. They seem to have the best track record out of any of the robo investors, but don't publish their mix of investments for each level. It's really hard for me to google therefore

What do you want to google for?  Even if you found the investment mixes (which can change all the time), do you have the skills to assess what suits your risk appetite? There's a pretty good description of the Wealthify risk levels here - this should be sufficient for you to pick the one you are comfortable with. Leave the rest to Wealthify - after all, you are paying them to select investments which suit your risk level. You would have to review that your risk level is still valid in the future, and take action if you want it changed. I don't believe Wealthify make adjustments based on your age and/or your planned length of investment. They just use the risk level you choose. For example, I am 67 and have set up an Adventurous Whealthify plan this year, for money that I don't expect to touch for 15-20 years, or ever.

You might also look at an alternative approach, the Target Retirement Funds from Vanguard , where selection of the portfolio is based mainly on length of investment, and which you can get from Vanguard directly, or from other platforms such as iWeb. Apart from the initial selection, they also do any necessary rebalancing for you. These funds aren't just for retirement investing - you could have, for instance a TR 2035 if you want to use some of your investment around 2035, and another TR 2050, for money you will want to start your retirement etc etc

MaxiRobriguez

There are really two things to consider:

1) Your own personal risk appetite, crudely: How much volatility can you stomach without panicking? Could you sleep well and not fiddle about with your investments if they'd dropped 25% in a week?
2) How long you'll be invested for. If you're risk appetite is high and you can tolerate volatility, then as long as you will be invested for a decade or more (say, retirement planning), then you can simply forget about what happens in the short term and ride the average annual gains for the higher risk funds. 

In terms of the breakdown, level 1 would be "protect capital, don't worry about gains" where as level 5 would be "chase gains, accept capital risk" with the three levels inbetween a mix of the two.

FWIW, I'm mid 30's, and I'm probably at what wealthify would call risk 6 if they had such a fund - 100% equtiies, overweight to emerging markets and small caps - but I can, and have, slept through 50% losses and my investment horizon is 25 years.

Albermarle

Your own personal risk appetite, crudely: How much volatility can you stomach without panicking? Could you sleep well and not fiddle about with your investments if they'd dropped 25% in a week? and the news was all doom and gloom about future prospects 

I have just added the phrase in bold, because I think a nervous investor could maybe live with a 25% loss, but might panic about the uncertainty of what was going to happen next i.e. possibility of more big falls .

maxsteam

dilby said:

They seem to have the best track record out of any of the robo investors, but don't publish their mix of investments for each level.

Oh dear. For me alarm bells ring every time I hear a new meaningless phrase like "robo investor". My opinion is that you are better finding a few funds and investments that together have a risk profile that you are happy with and then put the money there yourself, via an established stockbroker.

If they don't publish their mix of investments (or even the top ten holdings), it's something to avoid. You will have no way to independently check the performance of your investments.

All Wealthify will do for you, in a best case scenario, is choose a few funds, put the money in and charge a fee for doing this. There is nothing magic about applying names like "tentative" instead of putting a number to a fund's or portfolio's risk profile. The big difference between what Wealthify do and what other similar companies do is that Wealthify don't tell you which funds they will choose.

CKhalvashi

Assuming this is non-advised investment, you shouldn't risk more than you're happy with.

My risk tolerance is different to many of a similar age because my circumstances are different to many of those of a similar age.

You should be looking at the mix of investments compared to your own risk profile, while keeping a suitable emergency fund, and any advice will depend on your income, personal financial circumstances and your tolerance to risk your money.