How Illuminvest works

Illuminvest is an educational platform designed to help Australians think more clearly about investing. It does not provide personal financial advice, recommend products, or manage money. Every tool, score, and questionnaire on this site exists to surface patterns in how you think, plan, and respond to uncertainty, so you can make better-informed decisions on your own terms.

This page explains how every part of the platform works, what each score measures, and how to interpret the results. If something on the site produces a number, this page explains where that number comes from.

How the platform fits together#

Illuminvest is organised around a simple structure. There are questionnaires that help you understand your own risk profile, financial capacity, goals, behaviour, and preferences. There are articles that build foundational knowledge. And there are tools that let you stress-test your assumptions against historical data.

These pieces feed into a set of scores and dashboards. The scores are descriptive, not prescriptive. They highlight patterns and trade-offs rather than right or wrong answers. A high score is not necessarily better than a low one. The purpose is clarity, not ranking.

All amounts are in Australian dollars. Tax references assume Australian tax law. Structures such as superannuation and SMSFs are included where relevant. If a concept originates overseas, the platform re-anchors it to the Australian context.

Your Foundation dashboard#

The Foundation page is the central hub for authenticated users. It displays a personalised greeting and a readiness dashboard that aggregates progress across every component of the platform.

The dashboard shows your Investor Readiness score (explained in detail below), broken into its four components: Risk Profile Clarity, Behavioural Understanding, Personal Rulebook, and Knowledge Engagement. Each component displays a status indicator showing whether it is complete, partially complete, or not yet started.

The Foundation page does not interpret your results or suggest actions. It shows where you have explored and where you have not, so you can decide where to focus next.

What you see on the Foundation page#

• Investor Readiness score with a progress ring showing your aggregate out of 100.
• Four component cards showing the score and status for each readiness dimension.
• Missing items highlighted when questionnaires have not been completed.
• Links to the relevant questionnaire or content area for each component.

Scoring conventions#

Before looking at individual questionnaires, it helps to understand the conventions that apply across the platform.

The 0 to 100 scale#

Most numeric scores are reported on a 0 to 100 scale. This is not a percentage in the usual sense. It is a normalised position on a continuum. A score of 60 does not mean you passed and 40 does not mean you failed. The scale exists so that scores from different questionnaires can be compared consistently.

Bands and labels#

Each score is grouped into labelled bands. These bands provide plain-language context for a number that might otherwise feel arbitrary. Band boundaries are fixed and documented for each questionnaire.

Descriptive, not prescriptive#

Scores describe patterns. They do not prescribe actions. A risk tolerance score of 75 does not mean you should invest aggressively. A loss buffer score of 30 does not mean you should not invest at all. The scores surface information. What you do with that information is your decision, ideally in conversation with a licensed financial adviser if you need personal guidance.

Risk Profile questionnaire#

The Risk Profile questionnaire measures risk tolerance: psychological comfort with uncertainty and volatility. It does not measure risk capacity (your financial ability to absorb losses), and it does not imply what actions you ought to take.

Most people feel clear-headed in calm markets. The test is what happens on a noisy day.

How it is built#

The questionnaire uses three established instruments:

• Grable-Lytton 13-item Financial Risk Tolerance Scale. This is the primary measure. It is the most widely used risk tolerance scale in academic research and financial planning. Each item presents a scenario involving financial uncertainty, and responses indicate comfort level with that scenario.
• Survey of Consumer Finances (SCF) single-item risk tolerance question. This is a cross-check. It asks a single, direct question about willingness to take financial risk in exchange for higher expected returns.
• Income-gamble item. This is a second cross-check, drawn from household survey research. It presents a hypothetical choice between a guaranteed income and a gamble with higher expected value but uncertain outcome.

There are 15 total questions. Thirteen map to the Grable-Lytton scale. Two of those questions (Q9 and Q10) are paired and averaged to preserve the 13-item scoring structure.

How the score is calculated#

Each Grable-Lytton item is scored 1 to 4. The total ranges from 13 to 47, with a possible 0.5 increment because Q9 and Q10 are averaged.

For display on the Foundation dashboard and in summaries, the raw GL total is normalised to 0 to 100:

Normalised score = ((GL total - 13) / (47 - 13)) x 100

This keeps the Risk Profile comparable with other 0 to 100 scores across the platform.

Score bands#

Cross-check scoring#

• SCF cross-check: scored 1 to 4. Labels: 1 = no risk, 2 = average, 3 = above-average, 4 = substantial.
• Income-gamble cross-check: scored 1 to 6. Labels: 1–2 = low tolerance for downside, 3–4 = moderate, 5–6 = high.

Consistency check#

A mixed-signal flag is shown when the GL band is high and either cross-check is low, or when the GL band is low and either cross-check is high. Average GL bands do not trigger a mixed-signal flag.

Mixed signals are not errors. They are information. People are complex, and different framings of the same underlying question sometimes produce different answers. The flag exists to surface that complexity, not to override it.

Loss Buffer questionnaire#

The Loss Buffer questionnaire estimates risk capacity: how much financial stress a downturn could create given your circumstances. It is distinct from risk tolerance.

Tolerance asks how risk feels. Capacity asks how much risk your situation can actually support.

What it measures#

The questionnaire covers five dimensions:

• Time horizon. How long until you expect to need the money. Longer horizons provide more room for recovery.
• Liquidity buffer. How many months of living costs you could cover from cash or offset accounts. A larger buffer means less pressure to sell during a downturn.
• Debt stress. What percentage of income goes to debt repayments. High debt obligations reduce flexibility.
• Income stability. How secure and predictable your income is. Stable income means less reliance on portfolio withdrawals.
• Shock absorber. Whether you could comfortably cover essentials if your portfolio fell sharply. This measures practical resilience, not emotional comfort.

How the score is calculated#

Each question is scored 0 to 20. The average score and the lowest individual score are combined:

Adjusted score = min(average, lowest x 2)

This formula means that a single weak area pulls down the overall score. A person with excellent time horizon, liquidity, income stability, and shock absorption but very high debt stress will score lower than the average alone would suggest. The weakest link constrains capacity.

The final score is:

Loss Buffer score = round(adjusted x 5)

This produces a 0 to 100 scale.

Score bands#

Return You Need questionnaire#

The Return You Need questionnaire estimates goal pressure: the average real (inflation-adjusted) return required to reach a financial target from your current position.

This is not a forecast or a recommendation. It is arithmetic. Given what you have, what you are adding, and what you want to reach, how hard does your money need to work?

Inputs#

You provide four numbers:

• Current balance. What you have invested now.
• Monthly contributions. What you plan to add each month.
• Years. How long you plan to invest for.
• Target amount. What you want to reach.

Assumptions#

The calculation uses two fixed assumptions:

• Fees: 0.60% per year. This is a conservative estimate for a diversified portfolio of index funds in Australia.
• Inflation: 2.50% per year. This is the midpoint of the RBA's target range.

Returns are calculated in real terms and displayed in today's dollars. This means the target amount represents actual purchasing power, not a nominal figure that inflation has eroded.

How the return is calculated#

A monthly compounding future-value model determines the required real return. The calculation uses binary search between 0% and 50% per year to find the rate that produces the target amount.

If the target is achievable at 0% real return (meaning contributions alone are sufficient), the result is marked as less than or equal to 0%. If the required return exceeds 50%, the result is marked as greater than or equal to 50%.

Score and bands#

The required real return is converted to a 0 to 100 goal pressure score:

A low goal pressure score means your target is achievable with modest returns. A high score means you need strong returns, which historically require higher-risk allocations and come with greater volatility.

Behavioural Profile questionnaire#

The Behavioural Profile assesses how cognitive biases and stress reactions may shape decision quality under volatility. It is not a measure of intelligence or investment skill. Everyone has biases. The question is which ones are most active and how they might interact with market conditions.

What it covers#

The questionnaire has three sections:

Cognitive biases (12 questions). Six bias pairs are assessed, each using two questions. The biases measured are those most commonly documented in behavioural finance research: anchoring, confirmation, recency, overconfidence, herding, and mental accounting. Each pair produces a score indicating how strongly that bias pattern appears in your responses.

Emotional response (8 questions). These questions measure how you tend to react under financial stress. They are not asking whether stress is bad. Stress is normal. They are asking how strongly it affects your decision-making, whether it tends to trigger impulsive action, withdrawal, or something else.

Decision style (6 questions). These questions assess your preferences around delegation, rules, and flexibility. Some people prefer to set rules and follow them. Others prefer to stay hands-on and adapt. Neither approach is inherently better. The questions surface your natural tendency.

All items use a 1 to 5 Likert scale.

Cognitive bias scoring#

Each bias uses two questions. The bias score is calculated as:

Bias score = round(((raw - 2) / 8) x 100)

The cognitive composite is the average of all six individual bias scores. Bands: 0–25 low, 26–50 moderate, 51–75 high, 76–100 very high cognitive bias risk.

Emotional scoring#

The emotional raw score ranges from 8 to 40. It is normalised:

Emotional score = round(((raw - 8) / 32) x 100)

Bands: calm under volatility, some stress reactions, strong stress reactions, high likelihood of reactive decisions.

Decision style#

Likert scores are converted to 0 to 100: ((value - 1) / 4) x 100. Delegation and rules scores are each averaged from three items, with some items inverted. The combination produces one of four quadrants:

Overall behavioural risk score#

The three sections are weighted and combined:

Behavioural risk = emotional x 0.50 + cognitive x 0.35 + decision-style modifier x 0.15

Decision-style modifiers by quadrant: Set-and-stick = 30, Simple + flexible = 50, Hands-on with guardrails = 70, Hands-on + adaptive = 100.

Bands: 0–25 low, 26–50 medium, 51–75 high, 76–100 very high behavioural risk.

Guardrails#

When specific thresholds are exceeded (for example, elevated emotional scores or strong overconfidence, recency, or herding signals), the platform selects relevant guardrails from a fixed library. These are practical reminders designed to interrupt the specific patterns your profile suggests.

Duplicates are removed, a minimum set is ensured, and the list is capped at five. The results page allows you to acknowledge up to four guardrails, which contributes to your Behavioural Understanding score in the Investor Readiness calculation.

IPS Builder#

The IPS Builder captures your preferences and constraints across several domains to create a personal investment policy statement. It does not calculate a return or recommend instruments. It helps you articulate what matters to you before making decisions.

An investment policy statement is a written set of rules. Professional investors use them routinely. Most individual investors do not, which is part of why decisions often feel ad hoc.

What it covers#

The IPS Builder asks about:

• Liquidity. When you might need to access funds and how much flexibility you require.
• Tax. Your current tax position and any structures that affect how returns are taxed.
• Structure. Whether you invest through super, a trust, a company, or in your own name.
• Ethics. Any exclusions or screens you want to apply (industries, practices, ESG preferences).
• Implementation. How you prefer to access markets (ETFs, managed funds, direct shares).
• Maintenance. How often you plan to review and rebalance.
• Governance. Who is involved in your investment decisions and how disagreements are resolved.

Question logic#

Some questions appear only when a prior answer makes them relevant. For example, liquidity timing questions only appear if you indicate you may need to access funds in the near term. Multi-select questions include "none" and "I don't know yet" options that are mutually exclusive with other choices.

Outputs#

The IPS Builder produces summary rules per section: plain-language statements of your selected preferences. Flags are shown for unanswered or "I don't know yet" responses, highlighting areas to revisit as your understanding develops.

Completion score#

Each section is marked as complete (100), unknown (50), or skipped (0). A weighted average produces a 0 to 100 completion score:

This completion score feeds into the Investor Readiness calculation as the Personal Rulebook component.

Risk ceiling and alignment#

The summary page combines three scores to provide a high-level view of how your risk profile, capacity, and goals relate to each other.

Risk ceiling#

Risk ceiling is the lower of your tolerance and capacity scores:

Risk ceiling = min(Risk Profile score, Loss Buffer score)

The logic is straightforward. Even if you are psychologically comfortable with high volatility, your financial situation may not support it. And even if your finances could handle significant risk, your emotional response may not. The binding constraint is whichever score is lower.

Alignment insight#

When both the risk ceiling and goal pressure scores are available, the platform shows an alignment insight.

• Aligned means the gap between your risk ceiling and goal pressure is 15 points or less. Your goals are achievable at a risk level that matches your profile and capacity.
• Misaligned means the gap is larger than 15 points. This is not a problem to fix immediately. It is information to sit with. A large gap might mean your goals require more risk than you are comfortable with, or that your capacity cannot support the returns you need. Understanding the gap is the first step.

Investor Readiness score#

Investor Readiness is the platform's most comprehensive score. It aggregates four components to summarise how well-prepared you are for long-term investment decision-making. It does not indicate what level of risk is appropriate or whether you should invest.

The four components#

Risk Profile Clarity. This is completion-based (not value-based). The component gives up to 95 points for completing four core risk steps:

• Risk Profile questionnaire completed
• Loss Buffer completed
• Return You Need completed
• Risk level selected

Completing all four gives 95 points. The final 5 points are awarded after you interact with the Downturn Simulator, for a maximum of 100.

Behavioural Understanding. This starts from 100 minus your behavioural risk score (so lower behavioural risk produces higher understanding), then adds 5 points for each guardrail you have acknowledged, up to a maximum of 4 guardrails (20 bonus points).

Personal Rulebook. This is your IPS completion score, described in the IPS Builder section above.

Knowledge Engagement. This is your article completion percentage, bounded between 0 and 100. Every article you mark as read contributes to this score.

How the total is calculated#

Investor Readiness = average of the four component scores

Each component carries equal weight. The total is rounded to the nearest whole number.

Readiness bands#

Historical return assumptions#

Every part of the platform that references long-term investment returns uses the same underlying dataset: Dimson, Marsh & Staunton (DMS) — published annually in the UBS Global Investment Returns Yearbook. The edition used is the 2024 Yearbook, covering the period 1900-2023. All figures are geometric mean annualised returns in USD terms.

Source data#

These are factual historical averages. Past returns are not indicative of future results.

Why this source#

The DMS dataset is the most comprehensive long-term returns dataset available. It covers over 120 years of returns across multiple countries and asset classes, uses consistent methodology, and is widely cited in both academic research and industry practice. Using a single authoritative source ensures that every return figure on the platform is internally consistent.

How returns are used across the platform#

The same DMS data appears in three places:

1. Timeline Goals benchmarks. The real (inflation-adjusted) returns are shown directly as reference points so you can see where your required return sits relative to what each asset class has historically delivered.

1. Downturn Simulator recovery estimates. To model how long recovery from a crash might take, the simulator needs nominal (before-inflation) return estimates for each risk level. These are derived by blending DMS global equity returns (5.0% real) with DMS global bond returns (1.7% real) according to the growth-asset exposure for each risk level, then adding the platform's assumed inflation rate (2.5%).

1. Risk level descriptions. The drawdown ranges and negative-year frequencies shown for each risk level are calibrated against the same historical data, supplemented by Morningstar Australia Multisector Category classifications.

Deriving expected returns by risk level#

The platform defines five risk levels, each with a growth-asset exposure midpoint based on Morningstar Australia Multisector Category classifications. Expected nominal returns for each level are derived from DMS data as follows:

Nominal return = (growth% x equity_nominal) + (defensive% x bond_nominal)

Where equity_nominal = 5.0% + 2.5% = 7.5% and bond_nominal = 1.7% + 2.5% = 4.2%.

These are long-term averages used for modelling purposes. Actual returns in any given period will differ, sometimes substantially.

Fixed assumptions#

Two fixed assumptions are used across the platform:

• Inflation: 2.5% per year. This is the midpoint of the Reserve Bank of Australia's target range (2-3%).
• Fees: 0.6% per year. This is a conservative estimate for a diversified portfolio of index funds in Australia.

Downturn Simulator#

The Downturn Simulator is a stress-testing tool that shows how a portfolio might have behaved during historical market crashes. It does not predict future performance. It uses past events to make volatility tangible.

Most people understand "markets can fall" as an abstract concept. Seeing a specific dollar figure attached to a specific historical event makes the concept concrete.

How it works#

You enter a portfolio balance (default: $100,000) and select a risk level. The simulator then shows what would have happened to that portfolio during each historical crash scenario, given the growth-asset exposure implied by your selected risk level.

Risk levels and growth exposure#

Each risk level maps to a growth-asset exposure percentage. Growth assets (primarily equities) experience the full impact of market declines. Defensive assets (cash, fixed interest) are assumed to hold their value during crashes. Expected returns used for recovery modelling are derived from DMS data as described in the Historical return assumptions section above.

Historical scenarios#

The simulator includes the following historical crashes:

• 1973–74 Oil Crisis. OPEC oil embargo quadrupled oil prices, triggering stagflation. Equity decline: approximately 48%. Recovery: approximately 69 months.
• Black Monday (1987). The largest single-day percentage decline in stock market history. The Dow fell 22.6% in a single session. Equity decline: approximately 34%. Recovery: approximately 20 months.
• Tech Bubble (2000–02). The collapse of overvalued technology stocks. Equity decline: approximately 49%. Recovery: approximately 56 months.
• Global Financial Crisis (2007–09). A banking crisis that became a global recession. Equity decline: approximately 57%. Recovery: approximately 49 months.
• European Debt Crisis (2011). Sovereign debt concerns in Greece, Italy, and Spain. Equity decline: approximately 19%. Recovery: approximately 5 months.
• COVID-19 (2020). A pandemic-driven crash followed by unusually rapid recovery. Equity decline: approximately 34%. Recovery: approximately 5 months.
• 2022 Inflation Shock. Central banks raised rates aggressively to combat inflation. Equity decline: approximately 25%. Recovery: approximately 17 months.

What the simulator shows#

For each scenario, you see:

• Dollar impact. How much your portfolio would have fallen in dollar terms.
• Percentage decline. The portfolio-level drawdown, adjusted for your risk level's growth exposure.
• Recovery time estimate. Approximate months from the trough back to the previous peak, adjusted for risk level.
• Drawdown curve. A visual representation of how the portfolio declined over the crash period.

Comparison view#

The simulator also provides a comparison across all five risk levels for any selected crash. This makes it possible to see, side by side, how the same event affects portfolios with different levels of growth exposure.

Important limitations#

All figures are historical illustrations, not forecasts. Past crashes do not predict future crashes. Recovery times assume reinvested dividends. The defensive-asset assumption (holding value during crashes) is a simplification. Actual bond and cash returns during crises vary.

Risk level selection#

The Risk page allows authenticated users to select and compare risk levels. Each risk level is defined by its growth-asset exposure and comes with plain-language descriptions of what to expect.

What each risk level describes#

For each of the five risk levels (Very Low through Very High), the platform provides:

• Growth-asset range. The typical percentage allocated to growth assets like shares and property.
• Plain-English description. What the volatility experience feels like in practice, without jargon or sugar-coating.
• Historical drawdown range. The typical worst-case peak-to-trough decline for that risk level, based on historical data.
• Negative-year frequency. An estimate of how many negative years to expect in any 20-year period.

These descriptions are sourced from Morningstar Australia Multisector Category classifications and the Australian Standard Risk Measure (SRM) framework. Ranges are intentionally wide to reflect genuine uncertainty.

Selecting a risk level#

Selecting a risk level does not commit you to anything. It records a preference that can be revisited at any time. The selection feeds into the Downturn Simulator, allowing you to stress-test your chosen level against historical events.

Knowledge and articles#

Illuminvest includes a library of educational articles covering foundations, behaviour, concepts, strategy, markets, planning, risk, and getting started.

How reading progress works#

Authenticated users can mark articles as read. The platform tracks which articles you have completed and calculates a completion percentage based on the total number of articles available.

This completion percentage feeds directly into the Knowledge Engagement component of your Investor Readiness score. Reading more articles increases your readiness score, reflecting the principle that informed decision-making starts with understanding.

Learning paths#

Articles are organised into learning paths: curated sequences that build understanding in a logical order. Each path groups related articles around a theme, from orientation and core framing through to advanced topics like factor investing and currency hedging.

You can follow learning paths in order or explore articles individually. There is no penalty for reading out of sequence.

Article categories#

Articles are tagged by category:

• Foundations. Pre-investing essentials: buffers, debt, cashflow, how markets work.
• Behaviour. Biases, stress responses, decision frameworks.
• Concepts. Core investing ideas: diversification, compounding, inflation, real returns.
• Strategy. Approaches to portfolio construction and management.
• Markets. How markets function, why they fall, historical patterns.
• Planning. Goal-setting, review cycles, when to seek advice.
• Risk. Volatility, loss aversion, tolerance versus capacity.
• Getting Started. Practical steps for new investors.

The Glossary#

The Glossary provides plain-English definitions of investing terms, with Australian context where relevant. Terms are organised alphabetically with quick-jump navigation.

Where a glossary term relates to a specific article, a link is provided so you can read the full explanation in context. If a term does not appear in the glossary, it may be defined in the article where it first appears.

Frequently Asked Questions#

The FAQ page addresses common beginner questions in a direct question-and-answer format. Questions are sourced from patterns observed in investing forums, beginner guides, and the types of confusion that commonly arise when people start learning about markets.

FAQ answers follow the same conventions as articles: educational, not prescriptive, and anchored to Australian context.

Financial Snapshot benchmarks#

The Financial Snapshot on the Profile page compares your income, superannuation, savings, and savings rate against national benchmarks for your age group. This section documents the data sources and the full set of benchmark values used.

Data sources#

The benchmark data is drawn from the following Australian government and regulatory publications:

• ABS Household Income and Wealth, Australia, 2021-22 (Catalogue 6523.0). The Australian Bureau of Statistics' most recent comprehensive survey of household income, wealth, and financial circumstances. Covers income distribution, net worth, superannuation balances, and financial assets by age group. Published biennially.
• APRA Annual Superannuation Statistics, June 2024. The Australian Prudential Regulation Authority's annual statistical publication covering superannuation fund membership, assets, and account balances. Provides detailed breakdowns by age, gender, and fund type.
• ABS Average Weekly Earnings, November 2024 (Catalogue 6302.0). The ABS quarterly survey of average weekly earnings by industry, sector, and demographic. Used to cross-check income benchmarks against the most recent earnings data.
• RBA Household Savings Ratio, 2024. The Reserve Bank of Australia's measure of the household savings ratio as a percentage of disposable income, published as part of the national accounts data.

All figures are approximate medians and percentiles derived from these publications. They are used for educational context only and do not constitute financial advice.

How comparisons work#

When you enter your date of birth, the platform maps your age to one of ten age groups. Your financial figures are then compared against the 25th percentile (p25), median, and 75th percentile (p75) for that age group. The comparison produces a position label:

Income benchmarks by age group#

Annual individual income (before tax), approximate, sourced from ABS.

Superannuation benchmarks by age group#

Superannuation balance, approximate, sourced from ABS and APRA.

Savings benchmarks by age group#

Total savings excluding superannuation, approximate, sourced from ABS Wealth data.

Savings rate benchmark#

The national household savings rate benchmark is 3.2% of disposable income, sourced from the RBA. This is compared against the savings rate percentage you enter. The p25 and p75 thresholds used for comparison are 0% and 15% respectively.

Important notes on benchmark data#

These figures are approximations derived from published aggregate statistics. Individual circumstances vary enormously. The benchmarks do not account for differences in household size, location, occupation, or other factors that affect financial position. A figure above or below the median is neither good nor bad. It is context.

Your financial data is stored locally on your device and is never sent to our servers.

References#

The following academic instruments, data sources, and research underpin the platform:

Questionnaire instruments#

• Grable and Lytton (2001). Financial Risk Tolerance Scale. 13-item instrument measuring psychological comfort with financial uncertainty.
• Gilliam, Chatterjee, and Grable (2010). On the validity of the SCF single-item risk tolerance question as a cross-check instrument.
• Kimball, Sahm, and Shapiro (2008). On income-gamble risk tolerance proxies used in household surveys.

Historical return data#

• Dimson, Marsh & Staunton (2024). UBS Global Investment Returns Yearbook 2024. Long-term global returns data covering 1900-2023, geometric mean annualised returns. Published by UBS.

Risk level classifications#

• Morningstar Australia Multisector Category classifications. Used to define growth-asset exposure ranges for each risk level.
• Australian Standard Risk Measure (SRM) framework. Used to calibrate negative-year frequency estimates.

Benchmark data#

• Australian Bureau of Statistics (2023). Household Income and Wealth, Australia, 2021-22. Catalogue 6523.0.
• Australian Prudential Regulation Authority (2024). Annual Superannuation Statistics, June 2024.
• Australian Bureau of Statistics (2024). Average Weekly Earnings, Australia, November 2024. Catalogue 6302.0.
• Reserve Bank of Australia (2024). Household Savings Ratio. National Accounts data.

Scores can be stable for long periods, and they can also shift when life changes. That is normal and expected. The platform is designed to be revisited, not completed once and forgotten.