Can you sleep at night?
Your personality, age, income and investment goals determine your willingness to take investment risks. Can you sleep at night knowing that your investments might lose money? Alternatively, can you sleep at night knowing that others are making great investment returns and you are not?
How much risk is right for you?
Risk is the chance that an investment may provide a lower return than you expected. It might even mean that you lose some or (gulp!) all your money.
Higher risk can mean higher returns
The flipside of risk is the potential for returns. Returns are the gains one makes from an investment. In general, the higher the potential risk, the higher the expected return for taking the risk. But as we all know, high risk is by no means a guarantee of high returns!
Everyone is different. You need to be aware of the degree of risk you are comfortable with and find an investment strategy that is right for you.
Want to know more?
- Investment diversification
- Growth vs defensive assets
- What kinds of investment strategies do super funds offer?
- How financial advisers assess your risk tolerance
General advice disclaimer
This is general information only and does not take into account your personal objectives, financial situation or needs. You should assess whether the information is appropriate for you having regard to your objectives, financial situation and needs and consider obtaining independent professional advice before making an investment decision. If information relates to a specific financial product you should obtain a copy of the product disclosure statement for that product and consider that statement before make a decision whether to acquire the product.