Don’t minimise your chance of achieving your goals
Risk is a fact of life for any investor. Thanks to inflation, there’s even risk in doing nothing. To earn rewards you have to assume some level of risk. If you minimise risk you may also minimise your chance of achieving your goals.
Risk profiling
Determining the level of risk you are prepared to take is a process known as ‘risk profiling’. This is essential as the more accurate your risk profile, the greater the chance of recommending the most suitable investments for your needs.
Personal circumstances
Of course, your personal circumstances form an important part of the risk profiling process. Are you investing for income, growth or both? Your age is also important: if you are a young investor saving for a pension you may be more likely to take higher levels of risk due to the greater length of time to recover short-term losses.
All types of investment carry some risk of making a loss. The main thing is to be comfortable that your investments represent, as closely as possible, a level of risk acceptable to you, and continue to do so.