When you first saw the Oval investment section you may have been bouncing with excitement to get started (as indeed were we!). However, when you went to open your first position you may have been knocked back by what appeared to be a series of alarming, if not a little invasive, questions.
If Oval is your first foray into the investment marketplace you may have felt a little startled or even fully alarmed. So much so that you closed the app vowing to return to your investment journey at a later date.
If that sounds familiar then it is worthwhile taking a moment to read on to understand exactly what that survey was, and why we were asking you.
The survey was, in fact, a MiFID questionnaire. It is a questionnaire created by all companies who offer investment services, in order to comply with the Markets in Financial Instruments Directive passed by the EU.
This directive was created to protect the investor - that's you - and increase fair competition within the market. The questions in each MiFID questionnaire are designed to help companies define your personal profile as an investor before you begin investing with them.
They aim to understand your level of financial understanding and education, your previous investment knowledge, and your reasons for investing.
The Risk Profile
Based on your answers to these questions, we are able to create and assign you a risk profile. This risk profile lets us know which kinds of investment products are most appropriate for you; whether they be high, medium, or low risk options.
Everyone has a different profile based on their past experiences, so it’s in your interest to answer the questionnaire as accurately and honestly as possible in order to receive the best recommendations tailored for you.
Once you have your risk profile you’ll be able to start perusing your options. There are three risk profiles: High risk, medium risk, and low risk.
"Risk" in this sense, is what is used to measure the likelihood of making high returns on your profile, balanced against the likelihood of losing your investment. High risk profiles may offer assets that create more returns, but they are also more at risk of losing money too.
Always keep in mind though, that your risk profile is only a guideline. If you want to invest in specific products that are outside the parameters of your profile then you are of course at liberty to do so, but we do not advise it.
Your capital is at risk, and past performance may not be a reliable indicator of future results. Oval Money is not permitted to provide financial advice, and if you have any questions please consult an expert.