Investing jargon made simple: Risk
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
Investing for the first time can be a confusing experience, with the industry dominated by words and terms that are poorly understood outside of the investment bubble.
At True Potential Investor, we believe in making investing clear and accessible for everyone. Over the next few weeks, our new Jargon Buster series is going to be looking at some of the key terms you’ll come across on our website.
Risk
One of the most important things to consider when starting out your investment is risk.
Risk is the potential for the value of your investment to fall or rise in value. To obtain the opportunity of growth in your money, you are taking risk. It means that you are accepting your money could fall in value but, historically, there is a greater chance over a longer term that you could see your money rise in value by riding out fluctuations in the market.
What you need to remember is that over the long term, the stock market has a history of going up. Risk can become reward.
Risk is important as it gives your money opportunity to grow. At True Potential Investor we manage risk with Global Diversification in our Fully-Managed Investment Portfolios. In other words, your eggs aren’t all in one basket and your risk is spread across thousands of different holdings. If one stock or region underperforms, the aim is for the others to maintain their value or potentially increase. Rest assured, our expert investment team alongside our Fund manager partners are actively managing your money with the aim of growth and reducing risk.
Our investment team work with fund partners such as UBS, Allianz and Goldman Sachs Asset Management. Through these partners we gain access to 9,000 experts in 200 locations. Your eggs aren’t all in one basket, thus your risk is managed to some extent.
Remember, the amount of risk you are willing to take is ultimately a decision for you. Keep in mind that a long term perspective will help you to reduce risk, as time could allow you to ride out fluctuations in the market.
