What's my attitude toward risk and return?
Key to developing your strategy is considering how you feel about risk compared with return:
- Are you happy to build your wealth more slowly to reduce the risk of losing money?
- To potentially grow your wealth more quickly, are you willing to risk the potential of negative returns?
All investing involves a trade-off between risk and return, and the most important element of the risk/return equation is you. Your attitude to risk should be the main driver of your investment decisions. You need investments that will allow you to sleep soundly at night but work hard towards achieving your financial goals.
To understand more about investment risk and how to manage it, and to see the returns of the main types of investments, read up on assessing investment risk and return. Consider how comfortable you would be with the chance of losing money or with returns on your investments varying widely from year to year. Use our investment risk profiler to help determine the level of risk you may be prepared to take when investing.
Diversification
Diversification is an effective way to manage risk. There are many different ways to diversify your investments, including using managed funds, which may invest across different asset classes, countries, or sectors.
To further understand how to diversify your investments, read up on Diversify your investments to manage risk.
Use our diversified strategy visual demonstrator to see more benefits of a diversified growth strategy.
