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The market's ups and downs can be nauseating, spurring some investors to make irrational decisions. But Riskalyze attempts to ground your expectations by helping you determine the volatility you're willing to stomach.
While most risk tolerance assessments ask questions based on how psychology affects investment decisions, Riskalyze's approach is rooted in math.
"We're taking the subjectivity and guesswork out of risk analysis," said Riskalyze CEO Aaron Klein.
The service, targeted toward financial advisors, prompts investors to say how much they are willing to invest in stocks and what type of losses might prompt them to sell. Based on those numbers, Riskalyze asks up to a dozen questions to quantify exactly how much risk you're willing to take -- a process that typically takes about 10 minutes.
After answering those questions, you're assigned a so-called risk fingerprint which is tied to a best and worst case scenario -- or exactly how much you're willing to lose in a six-month period if you have the chance of gaining a certain amount.
Riskalyze also analyzes the risks in a financial advisor's model portfolio. That helps advisors figure out what asset allocation strategy best matches their clients' needs. --H.Y.