Dr Karrian Hepburn Malcolm, Head — Wealth Management, National Commercial Bank Jamaica LimitedStudioCraft
By my estimation, May is the official start of the annual resort-wear season and with it comes the need to ensure our wardrobes reflect both your current personal style and the desired look you would like to exude.
Now imagine selecting an outfit for the next calendar event. The first ensemble feels too bold, the second too subdued, but the third strikes the perfect balance — stylish yet comfortable. Just like curating the ideal outfit, determining your investment risk profile involves finding the right mix of assets to align seamlessly with your comfort level and financial goals.
Are you dressing your investment portfolio in styles too bold or too understated for your personal taste?
If you’re not yet sure how your choices fit you, now is the perfect time to figure out what investment “style” suits you best. Just like fashion, there is no single right or wrong when it comes to your risk profile — it’s all about identifying what works best for your unique situation and comfort. Before stepping onto the investment runway, it’s essential to assess both your willingness and your capacity (ability) to take on risk, based on where you are in life and what financial goals you’re trying to achieve.
Understanding your risk profile empowers you to make more informed investment decisions, such as building a well-curated portfolio that offers the potential for growth while helping you manage market fluctuations — much like putting together an outfit that balances style and practicality.
What, exactly, is your risk profile?
Your risk profile comes down to two key elements — how much risk you
can take and how much risk you’re
willing to take. When evaluating your ability to take risks, we look at the hard facts. This is known as your
risk capacity, the more objective side of the equation. Factors like the size of your investment portfolio, your time horizon, liquidity needs, income, and existing debt help determine just how much risk you can afford to tolerate.
For example, someone in their mid-thirties with a stable, well-paying job and no intention to tap into their investments anytime soon may have a higher capacity to make bolder financial decisions. Compare that to someone closer to retirement, managing significant debt, and relying on their investments for income — they may need a more tailored, conservative fit.
Then there’s your
risk tolerance — and this is where things get personal. This is all about your mindset and emotions. Some people thrive on the excitement of taking risks, while others lose sleep over even small market dips. Think about it: How do you feel when your investments go through ups and downs? Are you able to stay calm and stick to your plan? Often, your risk tolerance can be identified through the use of psychometric tools (like questionnaires) or by examining your past behaviour and factors that contribute to the financial decisions you make.
These two elements — capacity and tolerance — combine to form your complete risk profile. But keep in mind, they don’t always align. You might have a taste for high-fashion risks, but if your finances require a more practical approach, you may need to tailor your investment style accordingly. A clear understanding of both dimensions ensures your finances dressed for success, not stress.
Fortunately, discovering your risk profile is easier than ever. Earlier this year, NCB Capital Markets Limited launched its on-the-go ‘Risk Profiler and Asset Allocation Tool’, accessible right from your phone. Just text MYWEALTH via
WhatsApp to 876-728-7075 and complete a quick questionnaire. Once done, the tool will categorise your investment style — whether you’re aggressive, moderate, or conservative — and give you a summary of how you should be investing.
Types of risk profiles
Aggressive investors tend to favour bold styles — unafraid of volatility and willing to embrace riskier investments in the pursuit of higher returns.
Moderate investors are more balanced — open to incorporating trendier pieces into their wardrobe but still grounded with timeless staples. Their portfolios typically mix riskier assets with safer options.
Conservative investors lean toward classic, understated looks. They prefer stability and low volatility, favouring safer investments like fixed income to preserve wealth and avoid losses.
Take a moment to reflect on your own investment style. Are you drawn to daring financial moves, or do you prefer a more measured approach? Once you’ve got an idea, complete the assessment to confirm.
Why is it important to know your risk profile?
Understanding your risk profile helps you tailor your portfolio to your personal comfort — choosing the right “outfit” of assets that reflect both your goals and your lifestyle. If the assessment reveals your current portfolio is too subdued for your growth ambitions, it’s like realizing your wardrobe could use a pop of colour — you can work with an NCBCM wealth advisor to bring it into better alignment.
On the other hand, if you’re wearing an investment style that feels too daring for your comfort level, you risk overexposing yourself to financial shocks and unnecessary stress. Either way, it’s worth setting an appointment to ensure you’re dressed for financial success. Reach out by emailing
[email protected] or calling 876-960-7108.
