Risk and reward explained

Among investment products, typically:

• High-risk investments offer potentially higher returns
• Low-risk investments offer potentially lower returns

Your attitude to risk

Keeping your goals in mind, have you asked yourself the questions below:

• Do I have time to make long-term investments, which would allow me to take greater risks for higher returns?
• Can I afford to lose some of the money I invest in short-term, high-risk investments? Can I manage short-term fluctuations and drops in the value of my holdings by investing for a longer period?
• What risk level can I take while still protecting my children's future?
• Am I fine with potentially low returns if it means my money is safer?
• If I go for safer investments, will the returns be enough to cover inflation?

High risk vs low risk

Everyone has different reasons for saving and often your wealth management goals can be a deciding element in how much risk you're prepared to take with your money.

If you're making a wealth management plan for your children's education, then you might be investing over a long period of time and looking for a high return. As a result, you might prefer a comparatively high-risk investment option.

Should your goal be to purchase a new car, go on holiday or decorate a house, you will be investing for the short term and expecting a guarantee of your investment. Accordingly, you may prefer a low-risk investment option.