Am I A Low Medium Or High Risk Investor

Published / Last Updated on 23/05/2019

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:

  • Short term money (needed 1-5 years) - should be low risk
  • Medium term money (needed 5-10 years) - should be lower and medium risk
  • Long term money (needed 10+ years) - should be medium and higher risk

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



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