Risk and Reward
Different people have different attitudes to risk. You need to be clear about the degree of risk you are willing to accept before undertaking any kind of investment. The following is an example of a Risk/Reward profile
- These risk categories are for guidance only. Your IFA 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 potentially usually mean that higher returns may be possible BUT also the risk of losing money is also increased.
- Lower risk generally means 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 5 year investment time frame is wise.
- Risk can also be in terms of how you invest. Investors wishing to minimising risk would consider a broader investment spread as opposed to investment in a specialist area.
Remember past performance is not a guide to future returns. The value of investments and the income from them can go down as well as up. The level of tax benefits and liabilities will depend on individual circumstances and may change in the future. Exchange rate fluctuations may cause the value of underlying overseas investments to go down as well as up. Some Funds investing in specialist sectors or areas carry greater risks due to the potential volatility of market sectors into which the funds invest.
You should not invest without consulting a Key Features Document and supporting literature.