Video: Risk Explained
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.
Julius Poliakas talks about ‘risk’ when investing. “Has the idea of ‘risk’ put you off investing? It shouldn’t. Risk is a key factor to making your money grow when investing, understanding risk and learning how to manage it effectively can help you to achieve your financial goals.”
When investing, your capital is at risk meaning you could lose money. However, by accepting the risks, you could potentially benefit from the gains if your investment portfolio performs well.
With True Potential Investor, you can manage risk by investing in reputable, diversified funds. You can also choose a risk profile to match your attitude to risk – Defensive, Cautious, Balanced, Growth and Aggressive.
Think about your circumstances. The earlier you invest, the more time you have to ride out fluctuations in the market. An aggressive approach could make sense if you are looking to grow your money over a long period.
If you are older, then taking less risk as you approach retirement would make sense, as you have less time to ride out fluctuations in the market.
You should also think about risk in broader terms. Cash is not always the best option
With interest rates so low and inflation rates relatively high, money left in a Cash ISA could actually be losing value. You run the risk of your money not growing at the same pace as prices.
A Stocks & Shares ISA gives you the opportunity to grow your investment, of course there is risk involved, but by not accepting that risk you could be missing out on potential gains.
