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Understanding investment risk

  • The different types of investment risk explained
  • The risks of not investing - how inflation costs you money
  • How to work out your individual risk profile

What's in this guide

What is investment risk?

The higher the risk, the higher the potential return on your investment but market risk, inflation risk, capital risk and others must all be considered.

Capital investment risk

Some investment products will put your money at more risk than others so you need to be comfortbale with possible losses to your capital.

Investment risk from inflation

Which? explains how your money could suffer the negative effect of inflation, which can reduce the real value of your money and how to avoid it.

Shortfall risk

You can manage shortfall risk by setting realistic targets for your investments and finding the right strategy to achieve them while avoiding big losses.

Specific investment risk

There are numerous 'share' based risks to consider including market risk, currency risk and manager risk. We explain these here.

Deciding your attitude to investment risk

When investing, only you can decide how much risk you are prepared to take. So how do you balance your risk tolerance with your investment goals?

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