The risk-return scale ranges from 1 to 7, with 1 being the lowest risk and 7 being the highest.
If the fund is higher risk, there’s a greater chance you’ll lose some or all of the money you originally invested. There is also a greater chance of reward. Funds that are higher risk, generally invest a high proportion in shares.
Lower risk funds are more stable, with a lower risk of loss but also a lower chance of growth. Low risk funds have a higher proportion of assets invested in cash and bonds.
To help understand your attitude to investment risk, ask yourself:
- How comfortable are you with the fact investments rise and fall in value?
- What would be the immediate and long-term impact of your investments losing value?
- How would you feel if you didn't reach your investment goals?
When choosing an investment based on your risk level, you can compare funds using the Key Investor Information Document.
If you’re not sure about your attitude to risk, our Financial Advisers can help.
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