Risk Explained
ATTITUDE TO RISK WHEN INVESTING
What we mean and what you understand
1. FIRST & FOREMOST
Ascertaining your own attitude to risk and conveying that feeling to your adviser is an essential component of investment. Personal temperament and circumstances will affect the issue.
If you feel uncertain, the position may be clearer if you consider that the risk profile of a person on an income of £40,000 p.a. with investment assets of £400,000 may well be different from a person on £4,000 p.a. with assets of £14,000.
So, the degree of risk you may WISH to accept might have to be amended to a degree of risk you can AFFORD (£40,000 or £14,000?). But, sometimes both desire and affordability may have to be overruled by selecting the degree of risk NEEDED to achieve your objectives.
2. NEXT
The generally accepted levels of risk are No Risk; Low Risk; Medium Risk; Higher Risk and High Risk. At Porter Brown we show this in one of two forms:
| A. | Very Conservative / | .......... | / Conservative / | .......... | / Realistic | .......... 5 |
| (1) | 1½ | (2) | 2½ | (3) |
ON THIS SCALE, Number 5 is HIGH RISK.
| B. | 1 | ........ | 2 | ........ | 3 | ........ | 4 | ........ | 5 | ........ | 6 | ........ | 7 | ........ | 8 | ........ | 9 | ........ | 10 |
ON THIS SCALE, number 1 is a, say, ‘no risk’ National Savings investment and number 10 is a flutter on the 3.30 at Newmarket!
PLEASE IDENTIFY YOUR POSITION ON EITHER OF THE ABOVE SCALES
Go to the next page for a jargon free explanation of the different levels of risk.
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