Riskalyze Helps you Make Decisions Based on Your Risk Fingerprint

By Nathaniel Mott , written on March 19, 2012

From The News Desk

My head starts to spin every time I see a line graph.

I have to decipher which company is being referred to by four capitalized letters and what all those percentages detailing how the stock is faring on a certain market mean, and then switch tabs to catch up on the latest link-bait article.

The end result is the stock market makes me feel like a fool as I stumble my way around, hoping to trip, fall and accidentally land on the the best place to put my money.

Thank God Riskalyze doesn't make me feel that way.

Based in Northern California, Riskalyze is a Webapp that asks me to answer a few questions in order to grab my "risk fingerprint". By identifying how comfortable I am with taking risks and providing a number of different "starter" portfolio options, Riskalyze has made investing personal and easy.

Let’s say you have $5,000 to invest. You can afford to lose about $2,000 before you would have to make decisions that would affect your personal life in a major, negative way; for example, not sending your kids to college, or depleting your entire savings. If there’s a chance that you’ll lose $2,500 on a certain investment, Riskalyze will automatically remove that stock from the portfolio that you’ve chosen.

In essence, you’re teaching Riskalyze what stocks it should show you based on how comfortable you are with taking risks. If you’re a big risk taker and you’d be willing to bet it all if the return would be high enough, Riskalyze will display different stock options from someone like me, who would want to hold on to my money and stick with smaller risk and reward.

Before you cry foul and say that you don't want a Web app deciding on which stocks you should invest in, I've got two things to say. One: that's the entire point of personal investment software, Riskalyze is just making sure you follow its advice. Two: Riskalyze still gives you control over your portfolio, it simply makes the process easier.

If Riskalyze hides a certain stock from you based on your risk fingerprint, it will let you know beneath the rest of your portfolio. You can view this stock and choose to add it to the portfolio that you're creating with no issues, allowing you to circumvent Riskalyze's decision with little hassle. You're also given granular control over the overall percentage that a stock will take up in your portfolio, allowing you to take your gut feelings and combine them with Riskalyze's industry-standard mathematics to create the ultimate personal portfolio.

To date, Riskalyze has helped its users create $225 million in portfolios. This is calculated by throwing away some of the outliers; i.e. people like me who are just playing with the application to get a feel for it. That is a huge increase from the $150 million that the company was processing on January 18th of this year. The average amount that people plug into Riskalyze is between $25,000 to $75,000–not exactly chump change. That isn't to say that Riskalyze was created for people with large sums of money waiting around to invest; I was able to plug in $500 and create a portfolio. The software is really made for everyone.

CEO and co-founder Aaron Klein says his intention is to keep Riskalyze free for all users. Riskalyze is looking into revenue streams that complement the software, like connecting Riskalyze users with brokers, mentors, or investors. Riskalyze would in turn get a referral fee.

Riskalyze isn't as useful for experienced investors as it is for someone like me, but they aren't the target audience. Riskalyze is ideal for those of us who are ready to enter the stock market but aren't quite sure which way is up.

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