📅 Last updated: 8 May 2026
· 🏷 Topic: Risk profile, drawdown, investor psychology
· 🇧🇪 For: Belgian investors
Before you start investing, you need to know your risk profile. It consists of two components that are often confused:
- Risk tolerance — psychological: how well do you sleep during a 30% drawdown?
- Risk capacity — financial: can you FINANCIALLY handle a 30% drawdown without missing your goals?
Risk capacity: the objective side
| Question | High capacity | Low capacity |
|---|---|---|
| Horizon until you need the money? | 20+ years | <5 years |
| Stable income? | Yes, permanent contract | No, variable |
| Debt level? | Low/none | High |
| Other financial safety nets? | Occupational pension, real estate, etc. | Limited |
| Dependent on this portfolio? | No, one of many sources | Yes, main pension |
Those with high financial capacity can tolerate much more equity risk — even if it feels psychologically uncomfortable. Those with low capacity should invest more defensively — even if they feel “tough”.
Risk tolerance: the psychological side
Test yourself with these scenarios:
Scenario 1: Your portfolio of €50,000 drops to €35,000 (-30%) in 6 months. What do you do?
a) Sell everything out of fear.
b) Stop buying more, wait it out.
c) Do nothing — keep holding, keep buying on schedule.
d) Buy EXTRA because it’s cheaper.
Answer c) or d) → high risk tolerance.
Answer a) → low tolerance, possibly too much equity risk in your current portfolio.
Answer b) → medium.
Scenario 2: Your portfolio drops over 18 months from €50,000 to €25,000 (-50%). Can you still sleep?
Anyone who panic-sells here doesn’t belong 100% in equities. A 50% drawdown is historically possible (2008, 2020 for some strategies).
The statutory MiFID II questionnaire
For every Belgian securities account you must fill in a MiFID II questionnaire. It probes:
- Your knowledge and experience (have you invested before? in which products?).
- Your financial situation (income, assets, debts).
- Your investment goals (capital protection vs growth).
- Your risk appetite.
The broker then classifies you into a profile: defensive / neutral / dynamic / aggressive (or comparable categories).
⚠️ MiFID II is a statutory protection, not advice. The questionnaire restricts which products you may buy through this broker — but does not determine what is optimal for you.
Model portfolios per risk profile
Indicative (not advice):
Very defensive (<10% loss acceptable):
– 90% savings account + bonds
– 10% world equities
– Expected return: low (~3%)
Defensive (max 15% loss acceptable):
– 60% bonds + cash
– 40% world equities
– Expected return: medium (~4-5%)
Neutral (max 25% loss acceptable):
– 40% bonds
– 60% world equities
– Expected return: medium-high (~5-6%)
Dynamic (max 35-40% loss acceptable):
– 20% bonds
– 80% world equities
– Expected return: high (~6-7%)
Aggressive (50%+ drawdown tolerable):
– 100% world equities or even tilt towards emerging/small-cap
– Expected return: high (~6-8%)
See Portfolio construction and asset allocation for the detail per age and goal.
The honest test
Real risk tolerance only becomes apparent during a crash. Until then, people may overestimate what they can handle emotionally.
Rule of thumb: choose an allocation more aggressive than your risk capacity allows but less aggressive than your risk tolerance would suggest. A margin for the fact that your tolerance during stress is lower than in good times.
💡 Ten years of bull market makes everyone feel “aggressive”. Three months of 30% drawdown sorts the truly aggressive from the pretenders.
🔗 For the psychological side of market stress: see Behavioural finance(NL).
2026 Belgian capital gains tax
Since 1 January 2026, Belgium applies a 10% capital gains tax on realised gains from shares, ETFs, bonds and crypto, with the first €10,000 of net gains per year exempt. The risk-profile choice is unaffected by this tax (it applies only at sale, on net gains), but more aggressive profiles that produce larger long-term gains will more often exceed the annual exemption when realised.
What the MiFID questionnaire actually does to you
The profile the questionnaire produces is not advice but an access restriction. Your broker records it and uses it to determine which instruments you may trade. A defensive profile can block more complex products; a dynamic one opens them.
That explains why people sometimes answer toward the outcome they want rather than honestly. The problem with that is not administrative but practical: the questionnaire is the one moment when you are forced, in calm conditions, to state how much loss you can bear. Answer optimistically and you discover the real answer during the first sharp fall — the most expensive time to find out.
Risk capacity has a tax dimension in Belgium
Capacity is usually measured in income, horizon and buffer. A fourth element is rarely mentioned: de-risking here is a taxable act.
- Selling to reduce risk costs stock-exchange tax (0.12% to 1.32%) and can trigger the 10% capital-gains tax above the annual €10,000 exemption.
- So “I’ll cut my equity weighting if things get rough” is more expensive than it sounds — and setting the weighting correctly from the start is correspondingly more attractive.
Practically: if you are torn between two profiles, take the more defensive one and adjust with new contributions as experience grows. Building toward more risk costs nothing extra; unwinding does.
The honest test
Convert your current portfolio into euros at a 30% fall and write the number down. Not the percentage — the amount. If that figure costs you sleep, your profile is more dynamic than you can bear, whatever the questionnaire said.
Sources
- FSMA — MiFID II and risk profile
- Wikifin — Risk profile test
- ESMA — MiFID II framework
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