UNDERSTANDING THE RISKS

SMART PEOPLE MAKE SMART PLANS.

It is important to understand the level of risk you are prepared to take with your investment.

Generally the amount of risk you take is linked to the reward.

We are all concerned about financial risk i.e. the risk associated with investing in certain investment types and the potential returns from those investments.

The value of the investment and the income they produce can go down as well as up and you may not get back as much as you put in.

To get your view on risk we will need to understand a number of key factors:

Investment returns are not usually guaranteed and any investment strategy brings with it the potential for loss. Each type of investment carries a different level of risk.

An example of this is investing money with your local bank/building society. Currently returns from these are low because the Bank of England base rate is at a record low. Inflation is currently higher. For example, if you are earning 0.5% p.a. interest on your bank account savings and inflation, which is the measure for the standard of living, is around 4% p.a., your capital invested is not keeping pace with inflation in real monetary terms. Even with a deposit account, the interest you receive may not keep pace with inflation.

It is important to understand the level of risk you are prepared to take with your investment.

To get your view on risk we will need to understand a number of key factors.

We will cover these below for you:

YOUR ATTITUDE TO RISK

To understand your attitude to risk, we will take you through Intrinsic’s independent risk profiling tool in which we will ask you to respond to a series of 12 statements which help to understand your overall willingness to take risk.

You will be asked to respond to the statements with either:

The 12 statements are as follows:

People who know me would describe me as a cautious person

I feel comfortable about investing in the stock market

I generally look for the safest type of investment, even if that means lower returns

Usually it takes me a long time to make up my mind on financial matters

I associate the word “risk” with the idea of “opportunity”

I prefer the safety of keeping my money on deposit

I find investment and other financial matters easy to understand

I am willing to take substantial financial risk to earn substantial return

I have little experience of investing in stocks and shares

When it comes to investing, I’d rather be safe than sorry

I’d rather take my chances with high risk / high return investments than have to increase the amount I am saving

I am concerned by the uncertainty of stock market investment

The Profiler will place you in a risk category based on your answers. This risk category is the start point for you and your financial adviser to discuss and agree the correct risk category for your investment.

YOUR CAPACITY TO TAKE RISK

Your attitude to risk is only one factor in determining your risk profile and a suitable investment strategy. Potential loss must also be considered in relation to your financial objectives.

Your financial adviser will help you to understand what level of potential loss you could afford and feel comfortable with. This is known as capacity for loss. It is important that you understand the potential risk of any investment and the financial impact this may have on you.

Your attitude to risk and your capacity to take risk may di er. For example, you would like to invest in an adventurous way with your savings to maximise the potential growth, but your savings are your emergency fund and you cannot a ord to lose any of their value.

On the other hand, you may be young and saving for your pension and can afford to take more risk as your investment has a longer time to recover from any downturn in the market.

The value of the investment and the income they produce can go down as well as up and you may not get back as much as you put in.

It is important that you understand the potential risk of any investment and the financial impact this may have on you

YOUR NEED TO TAKE RISK

You may not be comfortable with taking any risk with your investment, but there may be a need to take some risk to meet your objectives. Your financial adviser will discuss and explain the implications.

Once we have established your attitude to risk, your capacity to take risk and need to take risk and how that fits with your investment objectives, we will be able to agree your overall risk profile.

Find out more about
Risk

Find out more about
Attitude to Risk

Find out more about
RISK PROFILES

Find out more about
Spreading Risk

WANT TO FIND OUT YOUR ATTITUDE TO RISK?

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Ablestoke Financial Planning LLP’s Registration Number is OC367708 and place of registration is England. The Company Registered Office is Admirals Offices, Main Gate Road, The Historic Dockyard, Chatham, Kent, ME4 4TZ. Ablestoke Financial Planning LLP is an appointed representative of Intrinsic Financial Planning Limited and Intrinsic Mortgage Planning Limited, which is authorised and regulated by the Financial Conduct Authority. Intrinsic Financial Planning Limited and Intrinsic Mortgage Planning Limited are entered on the FCA Register under reference 440703 and 440718. The term partner is used to refer to a member of Ablestoke Financial Planning LLP.

The value of investments and pensions and the income they produce can fall as well as rise. You may get back less than you invested.

Tax treatment varies according to individual circumstances and is subject to change.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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