Welcome

This tool is providing you a simulation of your future wealth depending on your individual risk appetite. You have the ability to distribute your starting wealth to one risk-free and one risky asset.

Guideline:

If this is your first time using the Risk Appetizer it is strongly recommended to begin in completing the steps 1 to 5 and following the instructions. Please note that the Risk Appetizer can only give an orientation and cannot replace a full-fledged financial consulting. For further information and the final realization of a financial plan please contact your bank or financial consultant.

Features:

The chart "Development of Wealth" gives you an overview of your future wealth by showing your expected wealth and a minimum wealth depending on the settings. In addition the fraction of wealth invested in the risk-free asset is shown.

The chart "Relative Frequency" provides a distribution of all possible theoretically outcomes of your success rate at the end of the investment horizon depending on the settings. The success rate is defined as the ratio of your starting wealth and a possible outcome. Components of the chart "Development of Wealth" are also included.

















1. Starting Wealth & Investment Horizon

How much money do you want to invest for a specific investment horizon?

2. Investment Properties

Risk-Free Asset

What is the current interest rate you receive for a safe investment?

Risky Asset

Choose your risky asset from the list below.

If you cannot find your asset of interest create a custom asset by setting its historical annual avarage return and volatility.









3. What is your Risk Appetite?

Confidence of the Minimum Success Rate

Choose the confidence as the level of accuracy for the calculation of the minimum success rate. If you assume the extreme case that your risky asset will suffer a total loss then choose "100 %" confidence.

Wealth Allocation

You have three alternatives to work out your optimal personal allocation of wealth between the risk-free and risky assets:

Alternative 1: The minimum success rate is the minimum percentage of your starting wealth that you will receive at the end of the investment horizon.

Alternative 2: The expected wealth is the final wealth that you recieve at the end of the investment horizon.

Alternative 3: The risk appetite is the percentage of the starting wealth that you will invest in the risky asset. The remaining wealth is invested in the risk-free asset.

4. Possible Trends of your Wealth

The development of your future wealth can be seen as a random variable and depends on your personal settings above. To show one possible random trend in the upper chart click the button below. The distribution of all possible trends at the end of the investment horizon can be seen in the lower chart.

To improve the understanding of the charts you can toggle the visibility of the chart components:



5. Summary

Start Conditions:

Starting Wealth:


Investment Horizon:

Available Assets:

Annual Risk-Free Interest Rate:

Annual Expected Return:

Annual Volatility:

Wealth Allocation

Confidence:

Minimum Success Rate:

Expected Wealth:

Risk Appetite:

1. How did you like the Risk Appetizer?

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2. Did the Risk Appetizer helped you to find your personal risk appetite?

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3. Did the Risk Appetizer improved your financial planning?

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4. Is the Risk Appetizer easy to understand?

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