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
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.
Some investment products will put your money at more risk than others so you need to be comfortbale with possible losses to your capital.
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.
You can manage shortfall risk by setting realistic targets for your investments and finding the right strategy to achieve them while avoiding big losses.
There are numerous 'share' based risks to consider including market risk, currency risk and manager risk. We explain these here.
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?