Risk Reward
Different people have different attitudes to risk. You need to be clear about the degree of risk you are willing to take and your capacity to withstand capital losses and how this would affect your lifestyle before undertaking any kind of investment. The following is an example of a Risk/Reward profile
Risk Profile
- These risk categories are for guidance only. Your Independent Financial Adviser may have chosen different ways of categorising risk.
- Different people have different attitudes to risk.
- You need to be clear about the degree of risk you are willing to accept.
- This is a difficult area as everyone views risk differently.
- There is a balance between risk and potential return – generally speaking, higher risk investments usually mean that higher returns may be achievable BUT also the risk of losing money is increased.
- Lower risk investments generally incur lower returns but a lower risk of losing money – nothing is ever set in stone though!
- Risk is also related to how long investment is undertaken. With Stocks and shares you should be taking a longer term view – most commentators advise that a minimum 5 year investment time frame is wise.
- Risk can also be in terms of how you invest. Investors wishing to minimise risk should consider a broader investment spread as opposed to investment in a specialist area.
THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.