INVESTOR HUB

Understanding your Attitude to Risk

Understanding investment risk and determining what level of risk you feel comfortable with before you invest is an important part of the investment decision.

In the investment world, risk can assume many guises; be it the risk posed by inflation silently eroding the spending power of savings, to the fluctuation in the value of an investment over time (either positive or negative) due to market movements, changes in interest or exchange rates, or the permanent loss of capital.

It is important to understand the different risks relating to investing, how they vary across (and within) asset classes and the opportunities provided by spreading investment across a range of asset classes, regions, sectors and securities.

Your Risk Profile

Your risk profile takes into account your overall appetite for risk, your financial position, your goals and your investment timeframe. By assessing this regularly, we recommend annually or as your situation changes, you can ensure that you don’t expose yourself to too much risk, or alternatively take a too conservative approach and possibly not attain the returns you would like, based on your investment timeframe.

Assess your risk profile and which fund might be appropriate for you - download our Risk Profile Guide.

Risk and Return Tradeoff

Cash, fixed income, property and shares (also referred to as equities or stocks) are the four main asset classes in the investment world. Each of these asset classes has different risk and return characteristics - cash is often viewed as the lowest risk, while shares are deemed higher risk.

Investing requires a balance between risk and return. The key is determining what level of investment risk you feel comfortable with before you invest.

Generally speaking, a lower level of risk is commonly associated with lower potential returns. Conversely, higher levels of risk are associated with higher potential returns.

The Chart below shows the long term relationship between risk and return of different asset classes in simplistic terms over the long term. There may however be variations in returns. 

Risk Return

We’re here to help

For further advice and to discuss your risk profile, investment goals, and the suitability of particular investments, contact our Service team.
0800 782 900 / info@quaystreet.com 

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