When investing, how much risk we are prepared to accept is important as we can’t know how well or badly any investments chosen may perform. We also can’t be sure how quickly our investments will then go up or down (volatility). Modern investments are made up of many different types of “asset”, depending on the mix of asset’s chosen, this will lead to the ups and downs’ experienced.
Traditionally, there are 4 simple asset classes as follows:
CASH. “Low risk”. Like a bank account, your capital is secure but will probably earn small returns.
FIXED INTEREST. “Low to medium risk”. These are loans to the Government (Gilts) or loans to companies (Corporate bonds).
PROPERTY. “Medium risk”. As the name suggests, this is investment into property (not houses), usually commercial property such as warehousing and office space.
SHARES. “High risk”. You actually buy a stake in a company via a stock market. Shares are usually associated with lots of volatility (ups and downs).
After completing our risk questionnaire, a suggested outcome may be one of the following:
Cautious Investor
You may broadly hold 25% in high risk shares, 5% in medium risk property and 70% in low-medium risk fixed interest investments and cash.
Moderately Cautious Investor
You may invest broadly 40% in high risk shares, 5% in medium risk property and 55% in low-medium risk fixed interest investments and cash.
Moderate Investor
You may be comfortable with 60% in high risk shares, 5% in medium risk property and 35% in low-medium risk fixed interest and cash.
Moderately Adventurous Investor
Now it could be invested broadly 80% in high risk shares, 10% in medium risk property and 10% in low-medium risk fixed interest investments and cash.
Adventurous Investor
This could be perhaps be 90% in high risk shares, 5% in medium risk property and 5% in low-medium risk fixed interest investments and cash.
Take a look at this short video to get a better understanding of the different assets classes and how we determine your attitude to risk!
If you have any questions please don’t hesitate to contact us!
What you get with Financial Fortress
Professional and qualified advisers
No cost or obligation initial review meeting.
A personally named and dedicated expert dedicated to you!
