2019 Guide to Understanding Investment Risk: Appetite for risk

Investing money always carries a certain level of risk and understanding how these risks relate to returns is essential

Your appetite for risk will depend on your life stage and whether you want to grow your money over the long term or need to draw a regular income. Usually, your age and relative proximity to retirement will determine whether you’re investing for the short term (one to three years), medium-term (three to five years) or long term (more than five years).

Appetite for risk

What to invest your money in is a big decision. To make an informed recommendation, it is important for us to understand your financial circumstances, your investment objectives and expectations, including the level of risk you are prepared to take and that which you can afford to take.

If you want to invest for many years, you may be prepared to take on more risk in your investment portfolio. This means you’ll have time to ride out any short-term fluctuations in investment returns and benefit from the potentially higher returns offered by growth investments such as shares.

As you approach retirement, or when saving for a specific goal such as the purchase of a home, you are less willing to risk losing your money.

This is particularly true when markets are volatile, and the risk of capital loss increases. At this time, you might put a greater emphasis on investing in defensive assets, such as cash and fixed income.

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.


Managing and minimising investment risk

Whenever you make a decision – in everyday life or in investment – you face an element of risk. But if you understand the risks, you can begin to manage and minimise them. Risk is part and parcel of investing, and as such cannot be avoided. While most investors prefer to avoid as much risk as possible, some risk is needed to achieve higher returns. To discuss how we can help you create the investment portfolio that meets your goals, please Contact Us – we look forward to hearing from you.

This guide is for your general information and use only, and is not intended to address your particular requirements. The content should not be relied upon in its entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of the content. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. All figures relate to the 2019/20 tax year unless
otherwise stated.