What is risk?
When talking about investments, risk and return are two terms that will come up often. What do they really mean?
Risk refers to volatility – how often, and how dramatically the value of an investment will move up and down. For most people, risk is the possibility of losing money or receiving a lower return than expected in any given period of time.
Return refers to the increase (or decrease) in value of an investment, which Tasplan members receive via crediting rates. Returns can be positive (an increase in value) or negative (a decrease in value).
Generally, assets that provide potentially higher returns also carry more risk. On the other hand, assets with lower risk normally provide lower returns.
For example, cash in a bank account does not change much in value, so it is essentially a low risk investment.
Shares however, can rise and fall in value quite substantially, so the degree of risk is higher.
The challenge for you in making your investment choice is to balance your desired returns with the degree of risk you are comfortable with.
Why not try the Risk Profile tool on the Calculators with easy steps page to help you.
This is not intended to be a substitute for getting professional advice, but will help you understand your risk profile and determine the type of investor you are.
We recommend all members seek professional financial advice in determining the option to best suit them. Tasplan's financial planners do not accept commissions. You recieve expert advice and there are no hidden costs. See our Financial Planning page.
To make an appointment with Tasplan’s financial planners call 1300 138 848, or email us for more information.