Understand risk profiling assessment and product risk rating
22 Mar 2022

Understand your risk profile assessment

Personal finance is intertwined with emotions, which have to be addressed before investing. It is important to understand your risk appetite - how much risk you are willing to take, how prepared you are to lose part or all of your capital, and whether you have the ability to make good any losses that have been incurred.

Why does your risk appetite matter?

Why does your risk appetite matter?

Your risk appetite is a measure of the amount of risk you are willing to take for potential returns. Some people have a high-risk appetite, and are not willing to accept the possibility of losing a significant part, or all of what they have invested. There are also people who are unwilling to risk even a single dollar on an investment – it’s more crucial to them to protect their wealth, than to grow it.

It is important to select investments that match your risk appetite, for a few reasons:

  • You need to invest in a way that allows you to sleep soundly at night, as the risk is within your acceptable range.
  • Besides your psychological comfort, an investment must also match your capacity to accept any losses. The amount of risk you can manage depends on various factors, such as your investment horizon (i.e. how long you will remain invested).
  • Another factor that may influence your risk appetite includes your investment time frame. If you are looking to invest for a longer period time, you have time on your side to recoup any loss. If you are an investor with a shorter investment time frame, as you might be nearing retirement, investing in high-risk products are not for you.

How to balance your investment risk and return

Balance your risk & return with these two steps

Step #1: Understand your risk appetite

A risk profiling questionnaire helps you to understand your risk appetite. Such assessments are usually made based on:

  • Your investment experiences
  • Your Ideal investment time frame
  • Your capital loss capacity
  • Your financial situation in the next 12 months

The results identify your risk appetite, which corresponds to the targeted return.

Each risk level in a risk profiling assessment corresponds to different level of risk appetite.

Step #2: Match your risk profile to suitable funds

Each fund carries a product risk rating (PRR) which is a measure of how risky the fund is. Ratings go from a scale of 1 to 5, with 1 being the lowest risk level, and 5 being the highest.

DBS Product Risk Rating


Investing in funds is not suitable for you.

Invest only in funds with PRR up to 2.

Invest only in funds with PRR up to 3.

Invest only in funds with PRR up to 4.

Invest in funds with PRR from 1 to 5.

Having identified your risk profile and product risk rating, you can use the Risk Profile filter in DBS Funds Search to find the fund that suits you.

If you intend to invest in a fund with a PRR that is higher than what is recommended for your risk profile, you will be required to acknowledge that you are fully informed of the risks involved and still wish to proceed with the purchase.

Find an investment that matches your profile

Everyone has different risk tolerances. Find out what yours is before embarking on your investment journey.

Filter to view funds in each risk category

Or get in touch for a clearer view of your finances.

Disclaimers and Important Notices

This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.