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Should you invest in low, medium or high risk funds? Decide what is the purpose/goal of your savings and what is your timescale.
Timescale is important! We suggest:
BUT .... Low, Medium and High Risk means different things to different people:
Some may consider Bank Accounts to be low risk others may consider them High Risk (as interest rates are low and inflation may devalue your cash over time).
Others will consider Stock Market funds medium and higher risk due to volatility, others may consider them lower risk as they generally outperform cash over longer periods and also dividends may be added i.e. profits/income to outweigh interest.
We suggest to work out your own risk profile you should decide what your TOLERANCE TO LOSS is.
E.g. You may decide that your tolerance to losses are:
Short term money (1-5yrs) = no more than +/- 3%pa deviation
Medium term money (5-10yrs) = +/-10%pa deviation
Long term money (10yrs+) = +/- 20%pa deviation
You should then divide your investments up accordingly