Understanding investment risk Risk attitudes
Only you can decide how much risk you're willing to take
Your own attitude to risk is crucial. Some people are happy to live with capital risk if it means the chance of a higher return in the end. Others are 'risk averse' and don't want to risk their capital under any circumstances.
Only you can judge what level of risk you feel comfortable with.
A good independent financial adviser will help you establish your attitude to risk, especially if you are not confident or experienced.
However it’s important to find an adviser that specialises in investment and to make sure that they go through this process of finding your ‘attitude to risk’ thoroughly.
Our section on finding a financial adviser will help.
You may have a different attitude for different types of investments. For example you might be happy to take some risk with money you won't need access to for many years – but if you are also saving up for something over just a few years, you'll need to be much more cautious.
Most importantly – ask yourself whether you can cope with the idea of your investment losing money. Or would you panic if the stock market dropped and take the lot out?
If the answer is yes to the last question, then stock market investments are not for you – no matter how long you have to invest.
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For more on investing, also see our book Save and Invest.
- For guidance on investing, call our experts on the Which? Money Helpline
- If you're choosing a financial adviser, read our expert guide to help you get the best
- Take a look at our expert guide to risk free investing
