Advinans assumes that risk is relative. If you have a long savings horizon, you can accept an absolute higher risk in order to get higher returns, even if you have a low risk preference. Similarly, Advinans reduces the absolute risk as you approach the withdrawal period, simply to ensure that you have access to the money when you need it. The savings horizon should thus weigh more heavily than the risk preference for the composition of an investment fund portfolio, even if different preferences with regard to risk-taking are obviously important. 


Advinans calculates the absolute risk based on the EU’s risk classification (a scale of 1-7 based on volatility) and we calculate the volatility (a static measure of risk) on a five-year horizon.