Assessing my attitude to risk
Assessing and revisiting your attitude to financial risk enables us to check that your investment portfolio represents both your desired returns and that it exposes you to the level of risk with which you are comfortable.
In general terms, the higher the projected return the higher the potential risk and the lower the risk the lower the potential for reward.
Your attitude to risk may well be affected by your attitude to the following:
- Inflation - are you optimistic about inflation in the medium to long-term?
- Interest rates
- what will happen in the medium to longer term?
- what is happening in Europe, America, Japan? - Market risks - are market rates realistic, what’s happening to business activity?
- Exchange rate risk - is there a foreign dimension to the investment?
- Political risk - is an impending general election affecting performance?
- Investment timescale - a shorter timescale tends to increase the risk.
Risk can also be mitigated within larger portfolios by diversifying investments and improving asset allocation.
With investments such as cash and bonds (classed as low risk)
and penny shares and futures investments (being high risk)
please rate how you would like your portfolio to be structured.
Please give your rating with 1 being low risk and 5 being high risk.