17/01/2019
How do I choose a fund which suits my risk profile?
You are self-employed and work hard. Are you ready to take your first steps as an investor? And are you thinking about opting for branch 23 insurance linked to investment funds? Then follow our advice below to make the right choice. A branch 23 insurance policy does not provide any capital guarantee and therefore represents an investment risk.
- The legislator requires intermediaries to establish your investor profile with you. In concrete terms, your broker will ask you questions about your expectations, your investment horizon, your assets, your financial knowledge, etc. Based on the answers, your broker will establish your investor profile with you. He or she will then only be able to offer you products which correspond to this profile. It is important in this case to ask all of the questions you want to ask and to understand what your broker is telling you.
- A broker is self-employed and by definition works with several insurers. It is therefore likely that these different companies will all have a wide range of branch 23 products with funds. Your broker can tell you what the best solution is in your case (depending on your investor profile) and also suggest that you invest in several different funds in order to limit the risk.
- You will also find more information about a fund on the insurer's website. But it will not tell you everything because the insurer will obviously highlight the virtues of its product. However, you will be able to consult the track record of a fund to get an idea of the returns over the past few years, but this will not be a guarantee for the future.
- Your broker can provide you with specialised advice. You can also visit Morningstar.be. The latter assigns a rating (from 1 to 5 stars) to each investment fund. This is not a guarantee for the future either, but it gives an idea. On the website you will find a number of legal documents (such as fact sheets) regarding the funds.
- Remember to speak with your broker about the costs associated with your branch 23 policy and the underlying investment funds, i.e. entry, management and exit fees. There will also be significant fees if you wish to switch from one fund to another under your branch 23 policy.
- Some insurers allow additional investment options to be purchased, examples of which include a dynamic stop loss and drip feed. These options can help you limit the potential investment risk. Your broker can tell you how useful this can be in your case.
- Once you have invested in a branch 23 policy, it will also be important to verify regularly that the fund mix you have chosen still matches your investor profile. Your broker can also help you in this case.
Here you will find everything you need to know about the advantages of branch 23 insurance offered by NN.
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