2. Goal setting and determining your attitude to risk

During our initial meeting we also discuss your goals, aspirations and your attitude towards risk.

Goal setting

This step considers your goals and lifestyle aspirations. Setting specific objectives assists us to prepare the most effective strategy for your financial future.

Examples of lifestyle and financial goals for the:

• short-term (1 year)
  annual holiday $3,000
  additional mortgage repayment $10,000
  house renovation $15,000
• medium term (3-5 years)
  overseas holiday $10,000
  new car $20,000
  university degree/masters $10,000
• long term (5+ years)
  pay off mortgage in 8 years
  start an investment portfolio
  retire at age 60 receiving $40,000 pa income

Your attitude towards risk (risk profile)

Risk is the chance that you will not achieve your financial goals. There are numerous elements of risk to be considered in your financial plan and your attitude towards risk must match your goals and timeframe.

There are many ways to reduce the impact of different risks, but the most effective way to deal with risk is to recognise and plan for it. By seeking professional advice risk can be minimised.

Types of risk

• Mismatch risk
• Inflation risk
• Interest rate risk
• Market risk
• Market timing risk
• Diversification risk
• Fund manager style diversification risk
• Liquidity risk
• Credit risk
• Legislative risk

We discuss, measure & consider your tolerance to risk in relation to your:

• investment objectives;
• time frame;
• investment knowledge; and
• expectations.