Understanding investment risk is such a major consideration for anyone looking to invest. It’s about being clear on the downsides of risk and, perhaps, focusing on this more than on the potential growth benefits. We assess three key areas around investment risk which are:-
How Much Risk are You Comfortable Taking?
It’s important to understand how you would feel when markets fall and you could see your investments reduce in value. Could you cope with the psychological impact of this?
How Much Risk do You Need to Take?
The level of risk you need to take in order to achieve your investment objectives will vary from client to client. Ensuring this is clearly established is very important. Too much or too little risk could have a damaging effect on your long term goals.
How Much Risk can You Afford to Take?
Depending on other resources available, different clients have different ‘capacity’ to incur falls in their investment values. Would a fall in the value of your investments affect your standard of living and security? It’s important to know the answer to this important question.
At Brighton Financial, we take the issue of investment risk very seriously. Clients have their own unique circumstances and objectives and we take this in to account when making investment recommendations.