Investment Risks

Why do you need to know about risk?

Any investment decision you make means that you must take a risk of some sort. And the decision will relate to the amount of money you invest, your circumstances at the time and your needs for the future. Basically, risk is the chance that you will not achieve your financial goals.

Tip: The Golden Rule is – The higher the expected returns, the higher the likely risk.

Usually when you make an informed decision to take on a certain risk, you create the opportunity for greater returns. Generally, the higher the level or short-term risk you are prepared to accept when investing, the higher long-term potential return will be. At the same time, the potential loss may also be higher. This is called the risk/reward trade-off.

1 You inherit $30,000. After meeting any commitments, where would you invest this money?
2 What level of return do you expect you investment to achieve?
3 How important is it that your investments keep pace with inflation?
4 How would you feel about the value of your investment going up and down, sometimes by as much as 30% or more, over a short period of time such as a year or less?
5 What is the main purpose of the investment?
6 If asked about the exchange rate, you:
7 An investment in overseas funds is, to you:
8 What do you want to achieve through this investment?
9 Do you have separate savings set aside for major expenses? This may include things like education, home mortgage payments, home repairs and retirement.
10 If a long-term investment started to lose money, you would:
11 You view an investor as:
12 In Investment terms, you regard yourself as:
13 You understand investment risk to be:
14 What is the likelihood of your requiring access to the invested money?
15 How long are these funds to be invested for?

Your score is

The recommended investment model for you is What does this mean?