Which investor profile describes you best?

Financial professionals who manage investments on behalf of clients, profile their clients according to the way they perceive the client's willingness to take risks with funds invested.

Some such broad risk profiles are:

Conservative risk profile: Aims for capital protection. Takes very low risk

Your primary investment objective is to preserve your capital or the principal amount you invested. You want to earn a predictable flow of income from your assets.

This means you find it more reassuring to invest in products with fixed maturities and predetermined returns. Capital growth or growing your wealth is of secondary importance. You are willing to take only limited risks with your assets usually over a short term investment horizon.

Defensive or moderate risk profile: Aims for gradual capital growth - Takes low risk.

Your principal investment aim is to gain a relatively stable and regular income. You are willing to take a moderate level of risk with the assets you invest in. You aim at generating a gradual increase in your wealth in the long term.

Balanced risk profile: Seeks a balance between risk and return.

Your main aim is to achieve capital growth over the long term. You seek relatively stable returns, but do not mind taking moderate risks. Nevertheless, you expect some income on your assets.

Dynamic risk profile: Seeks long-term growth potential.

You want to grow your wealth over the long term. You are willing to take more risks because you want higher returns. You are aware that shares can fluctuate in the short term and consider a temporary fall in your investment as a buying opportunity. Earning income from your assets is of limited importance.

Growth or aggressive risk profile: On a determined quest for growth

Your priority is to generate capital gains. You realise that over time, equity markets usually outperform other investments. You are not afraid of speculating or going into what can be considered as risky economic sectors. You see a temporary market fall or setback as a buying opportunity. You are not concerned about how much fixed income your shares earn.

Factors that affect a decision to sell shares

For many investors deciding to sell their shares can be far more difficult than deciding to buy.

There are many personal and market driven factors that can lead to a sell decision,

including the risk profile discussed. Some factors to be considered are:

* The shares are no longer a good fit for your investment goals and risk tolerance. This might happen because your goals have changed over time. Alternatively your planned goal may have been achieved.

This would mean that you would systematically start selling the shares that were intended to grow to the financial goal planned.

* Sometimes an investor may find that the company invested in, does not appeal to him or her as a good investment any longer. It may have changed its business plans and may not look as stable or there is a lot of volatility in its price movement.

This may mean that your investment is no longer within your risk tolerance levels.

Reinvestment opportunities

This is when you have identified a company that offers better returns than of the shares you currently hold. You can sell less advantageous shares. It is important to consider how your new purchase will fit into the rest of your portfolio and your strategies of investment.

Price movements

If a share price suddenly falls beyond a certain acceptable percentage, some investors consider this a 'sell' point, to eliminate the possibility of further losses.

Keep in mind that you may need to have observed the price movements of a share and have some idea of the share's volatility to see untoward falls in price. Share prices can recover after falling or vice versa, as you will observe when you have spent some time observing and trading on the market.

Overvalued shares

You may want to sell shares when they are pushed way past their true value. A share is considered overvalued if its current price is not justified by its earnings outlook and is, therefore, expected to drop in price.

Overvaluation may result from an emotional buying spurt, which inflates the stock's market price, or from deterioration in a company's financial strength. The strategy is to sell when they are over-valued and buy them back after a market correction has dampened the price.

Portfolio rebalancing

Rebalancing a portfolio entails bringing the percentage of each asset in an investment portfolio (asset allocation) back in-line if it has deviated from one's target asset allocation.

For example, at the start you decided that the best allocation for your circumstances is 60% shares, 30% bonds and 10% cash in your portfolio. If you now have 80% of your portfolio in shares you may consider that shares represent an overly large exposure in your portfolio.

In this case you can consider your overall portfolio allocation and diversification within the shares you possess. You can consider selling some of your stocks bringing the asset allocation percentages back into alignment.