At a glance

  • It’s never too late to invest, either independently or through a workplace pension
  • Speak to an expert to establish your risk tolerance, and ensure you know the advantages and limitations of your risk level
  • Be flexible. Your risk profile will change over time due to life experiences and how much time you have to reach your investment goal
  • Insist on a broad and varied investment portfolio to spread your risk and maximise your growth potential

At a glance

  • It’s never too late to invest, either independently or through a workplace pension
  • Speak to an expert to establish your risk tolerance, and ensure you know the advantages and limitations of your risk level
  • Be flexible. Your risk profile will change over time due to life experiences and how much time you have to reach your investment goal
  • Insist on a broad and varied investment portfolio to spread your risk and maximise your growth potential

At a glance

  • It’s never too late to invest, either independently or through a workplace pension
  • Speak to an expert to establish your risk tolerance, and ensure you know the advantages and limitations of your risk level
  • Be flexible. Your risk profile will change over time due to life experiences and how much time you have to reach your investment goal
  • Insist on a broad and varied investment portfolio to spread your risk and maximise your growth potential

When it comes to investing, the earlier you start the better, as you will have more time to plough money into various funds and more time to overcome setbacks and market volatility.

That said, it’s never too late to invest, providing you invest wisely and have enough time to realise your goal, be it boosting your pension pot or saving for a new home.

Calculated investment risk

Many younger people will be looking to buy a home or invest for their retirement, which may include taking advantage of a workplace or personal pension. It’s always important to recognise the level of risk you’re happy with. With workplace pensions, your employer will decide on the precise form of the investments, which will tend to be fairly medium-risk. Compared with investing for retirement, investing with the goal of buying a home has a shorter time frame. This fact makes it imperative to understand your personal risk profile.

Time for some risk self-assessment

Finding the degree of risk that feels right should be everyone’s starting point, and there are two main ways to achieve this aim.

One is to seek advice from an investment expert. The other is to give the matter some thought up front. Think about your track record. Have you ever made a mint from investments or had your fingers burned? Do your friends and colleagues consider you a cautious type? Can you focus on a long-term goal without being unduly concerned by blips in the short-to-medium term?

Low risk tolerance

People with a low risk tolerance feel more comfortable with a conservative plan. This typically favours funds that are weighed towards lower-risk bonds but also may include equity options.

Incidentally, even the most cavalier of investors should gravitate towards a more cautious approach as they near retirement or as they approach a shorter investment deadline, as would be the case if the goal is to be a homeowner. The last thing you want is no time to bounce back from a loss.

Medium-risk investments

A medium-risk investor can accept that some decisions will lead to a sudden drop in the value of their holdings, while others will see a welcome upswing.

This category of investor doesn’t want a white-knuckle ride but can handle funds with a healthy mix of medium-risk and higher-risk equity in their portfolio, alongside traditionally safer bets, such as bonds.

If you are looking to invest for a relatively short period of time, say five to eight years, funds where the balance is still tipped in favour of equity over bonds are probably a good option, but the stocks and shares will be less weighted to riskier prospects and may feature more from the larger indices, as you’d have less time to recoup any substantial losses.

High-risk investments

High-risk investors are most likely to have their sights firmly on a horizon that’s at least eight years off, and they are not overtly fazed by short-to-mid-term plunges. It’s easier to put up with seismic shifts in the value of your investments if you have time on your hands to claw your way back from a loss. These investors will be content with equity-rich funds, which include a sprinkling of riskier stocks and shares. Even still, ensure your funds have a bedrock of reliable, historically safe performers.

Be risk diverse, not risk adverse

Like it or not, risk is essential, so be risk diverse, not risk averse. Consider a healthy monthly or lump-sum investment in funds that are balanced but that favour equity. Younger people have time on their hands and can consider taking risks.

With sound advice you should be able to reach a point where your adviser has presented you with an asset allocation that offers a firm prospect of reasonably ambitious growth that you are content with.

This should be neither too risky nor so safe as to hardly be worth the hassle and annual management fees. Instead, your portfolio should be spread across a variety of assets, including riskier ones, so that if one takes a tumble, the impact is absorbed by the rest. It’s a commonly held view that this is more important than investment acumen or lucky timing – which is good news for the inexperienced investor.

Know your risk level

That’s one side of the coin. The other is, of course, ‘acceptable risk’, which will ebb and flow as life events dictate. Regular reviews, both of your portfolio performance and your long-term goals, are a must, particularly as and when big life events occur, such as the birth of a child or a new job.

Portfolio reviews will invariably require a little revision to your attitude to risk – although never feel obliged to move outside your comfort zone.

When it comes to investing, the earlier you start the better, as you will have more time to plough money into various funds and more time to overcome setbacks and market volatility.

That said, it’s never too late to invest, providing you invest wisely and have enough time to realise your goal, be it boosting your pension pot or saving for a new home.

Calculated investment risk

Many younger people will be looking to buy a home or invest for their retirement, which may include taking advantage of a workplace or personal pension. It’s always important to recognise the level of risk you’re happy with. With workplace pensions, your employer will decide on the precise form of the investments, which will tend to be fairly medium-risk. Compared with investing for retirement, investing with the goal of buying a home has a shorter time frame. This fact makes it imperative to understand your personal risk profile.

Time for some risk self-assessment

Finding the degree of risk that feels right should be everyone’s starting point, and there are two main ways to achieve this aim.

One is to seek advice from an investment expert. The other is to give the matter some thought up front. Think about your track record. Have you ever made a mint from investments or had your fingers burned? Do your friends and colleagues consider you a cautious type? Can you focus on a long-term goal without being unduly concerned by blips in the short-to-medium term?

Low risk tolerance

People with a low risk tolerance feel more comfortable with a conservative plan. This typically favours funds that are weighed towards lower-risk bonds but also may include equity options.

Incidentally, even the most cavalier of investors should gravitate towards a more cautious approach as they near retirement or as they approach a shorter investment deadline, as would be the case if the goal is to be a homeowner. The last thing you want is no time to bounce back from a loss.

Medium-risk investments

A medium-risk investor can accept that some decisions will lead to a sudden drop in the value of their holdings, while others will see a welcome upswing.

This category of investor doesn’t want a white-knuckle ride but can handle funds with a healthy mix of medium-risk and higher-risk equity in their portfolio, alongside traditionally safer bets, such as bonds.

If you are looking to invest for a relatively short period of time, say five to eight years, funds where the balance is still tipped in favour of equity over bonds are probably a good option, but the stocks and shares will be less weighted to riskier prospects and may feature more from the larger indices, as you’d have less time to recoup any substantial losses.

High-risk investments

High-risk investors are most likely to have their sights firmly on a horizon that’s at least eight years off, and they are not overtly fazed by short-to-mid-term plunges. It’s easier to put up with seismic shifts in the value of your investments if you have time on your hands to claw your way back from a loss. These investors will be content with equity-rich funds, which include a sprinkling of riskier stocks and shares. Even still, ensure your funds have a bedrock of reliable, historically safe performers.

Be risk diverse, not risk adverse

Like it or not, risk is essential, so be risk diverse, not risk averse. Consider a healthy monthly or lump-sum investment in funds that are balanced but that favour equity. Younger people have time on their hands and can consider taking risks.

With sound advice you should be able to reach a point where your adviser has presented you with an asset allocation that offers a firm prospect of reasonably ambitious growth that you are content with.

This should be neither too risky nor so safe as to hardly be worth the hassle and annual management fees. Instead, your portfolio should be spread across a variety of assets, including riskier ones, so that if one takes a tumble, the impact is absorbed by the rest. It’s a commonly held view that this is more important than investment acumen or lucky timing – which is good news for the inexperienced investor.

Know your risk level

That’s one side of the coin. The other is, of course, ‘acceptable risk’, which will ebb and flow as life events dictate. Regular reviews, both of your portfolio performance and your long-term goals, are a must, particularly as and when big life events occur, such as the birth of a child or a new job.

Portfolio reviews will invariably require a little revision to your attitude to risk – although never feel obliged to move outside your comfort zone.

When it comes to investing, the earlier you start the better, as you will have more time to plough money into various funds and more time to overcome setbacks and market volatility.

That said, it’s never too late to invest, providing you invest wisely and have enough time to realise your goal, be it boosting your pension pot or saving for a new home.

Calculated investment risk

Many younger people will be looking to buy a home or invest for their retirement, which may include taking advantage of a workplace or personal pension. It’s always important to recognise the level of risk you’re happy with. With workplace pensions, your employer will decide on the precise form of the investments, which will tend to be fairly medium-risk. Compared with investing for retirement, investing with the goal of buying a home has a shorter time frame. This fact makes it imperative to understand your personal risk profile.

Time for some risk self-assessment

Finding the degree of risk that feels right should be everyone’s starting point, and there are two main ways to achieve this aim.

One is to seek advice from an investment expert. The other is to give the matter some thought up front. Think about your track record. Have you ever made a mint from investments or had your fingers burned? Do your friends and colleagues consider you a cautious type? Can you focus on a long-term goal without being unduly concerned by blips in the short-to-medium term?

Low risk tolerance

People with a low risk tolerance feel more comfortable with a conservative plan. This typically favours funds that are weighed towards lower-risk bonds but also may include equity options.

Incidentally, even the most cavalier of investors should gravitate towards a more cautious approach as they near retirement or as they approach a shorter investment deadline, as would be the case if the goal is to be a homeowner. The last thing you want is no time to bounce back from a loss.

Medium-risk investments

A medium-risk investor can accept that some decisions will lead to a sudden drop in the value of their holdings, while others will see a welcome upswing.

This category of investor doesn’t want a white-knuckle ride but can handle funds with a healthy mix of medium-risk and higher-risk equity in their portfolio, alongside traditionally safer bets, such as bonds.

If you are looking to invest for a relatively short period of time, say five to eight years, funds where the balance is still tipped in favour of equity over bonds are probably a good option, but the stocks and shares will be less weighted to riskier prospects and may feature more from the larger indices, as you’d have less time to recoup any substantial losses.

High-risk investments

High-risk investors are most likely to have their sights firmly on a horizon that’s at least eight years off, and they are not overtly fazed by short-to-mid-term plunges. It’s easier to put up with seismic shifts in the value of your investments if you have time on your hands to claw your way back from a loss. These investors will be content with equity-rich funds, which include a sprinkling of riskier stocks and shares. Even still, ensure your funds have a bedrock of reliable, historically safe performers.

Be risk diverse, not risk adverse

Like it or not, risk is essential, so be risk diverse, not risk averse. Consider a healthy monthly or lump-sum investment in funds that are balanced but that favour equity. Younger people have time on their hands and can consider taking risks.

With sound advice you should be able to reach a point where your adviser has presented you with an asset allocation that offers a firm prospect of reasonably ambitious growth that you are content with.

This should be neither too risky nor so safe as to hardly be worth the hassle and annual management fees. Instead, your portfolio should be spread across a variety of assets, including riskier ones, so that if one takes a tumble, the impact is absorbed by the rest. It’s a commonly held view that this is more important than investment acumen or lucky timing – which is good news for the inexperienced investor.

Know your risk level

That’s one side of the coin. The other is, of course, ‘acceptable risk’, which will ebb and flow as life events dictate. Regular reviews, both of your portfolio performance and your long-term goals, are a must, particularly as and when big life events occur, such as the birth of a child or a new job.

Portfolio reviews will invariably require a little revision to your attitude to risk – although never feel obliged to move outside your comfort zone.

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