How much risk are you willing to take in order to achieve your investment objectives? How much risk can you afford? Both questions are important in determining proper asset allocations in your portfolio.

Risk tolerance is a measure of your emotional comfort with financial risk. At Cardiff Park, we determine risk tolerance through a scientifically-designed survey requiring just a few minutes to complete.

Risk capacity is the extent to which your finances can sustain financial setback. Factors involved include age, net worth, years to retirement if not retired, investment knowledge and current and anticipated cash flow. Once Cardiff Park takes you on as a client, we gather detailed information that provides us with a full understanding of your risk capacity.

If there is a mismatch between financial goals, risk tolerance and risk capacity or the subjective and objective components of risk, then we seek to work out a trade-off involving some mix of investing more, taking more risk or relaxing future goals.