How much risk should I take on?

All investing has risks attached to any potential reward, but this can vary from investment to investment. The higher the risk of an investment the higher the potential returns it will make, however you increase the potential to lose some or all of you your money and investment will most likely be more volatile.

The funds we offer contain different asset types and the variance in those asset types influences the amount of risk the fund has. For example a fund with a greater proportion of its investment in company shares compared to cash or company bonds will have a higher level of risk than the other way round.

How to approach risk

Time horizon
Investing is best when you think long term. It means your investments may be able to recover any short-term losses, as well as benefit from compound returns essentially returns on any investment returns you make.

Diversification
Owning different types of investments through something like an investment fund (or having multiple investment funds) means if one doesn’t perform well, you could still receive the potential returns of others. The benefit of a managed fund is that it has a greater level of diversification that just buying one share or stock. Diversification is by industry, sector, geography and asset class. The benefit of diversification is that it helps reduce your risk.

Combining different asset classes
Multi-asset funds essentially blend different types of investments together. This is so you’re not putting all your eggs in one basket and can benefit from the performance of different asset classes at once. Spreading your money across a variety of investments is known as diversification and is one way of managing risk.