Capacity For Loss How To
Request
- Bob has £100,000 currently invested in a risk rated ISA.
- He contributes £500 per month to his ISA.
- He expects to increase his contributions each year, broadly in line with price inflation increases.
- Bob wants to know which risk profile within risk group 5 would allow him to meet his ISA balance target of £150,000 after ten years, with a 95% probability
{
"balance": 100000,
"contributions": {
"amount": 500,
"frequency": "MONTHLY",
"increase": {
"basis": "RPI",
"rate": 0
}
},
"riskGroup": 5,
"term": 10,
"target": 150000,
"percentile": 5
}
Result:
- For Bob to surpass his minimum ISA target of £150,000, his highest risk profile capacity is 3. This will enable him to be comfortable with the potential shortfall in investing, but also to be exposed to a higher return than risk profiles 1 and 2.
{
"riskResults": [
{
"risk": 1,
"value": 162303.38
},
{
"risk": 2,
"value": 158053.66
},
{
"risk": 3,
"value": 153107.67
},
{
"risk": 4,
"value": 144903.95
},
{
"risk": 5,
"value": 132049.34
}
],
"riskProfileCapacity": 3
}