Risk management

Who dares wins…

Risk Management

Your attitude to risk

When deciding whether to invest, it’s important to consider how much risk you are willing to take with your money.

Risk is a very personal thing - what you believe to be a cautious approach, might appear to be a gamble to someone else. In other words, what may be a small amount of risk to one person may be huge to another.

If you are going to invest, you need to be prepared to take some level of risk which can mean seeing at least some fall in the value of your investment. Some investments carry the risk of losing all of your money (and in some cases, more money than you originally invested).

Risk can never be eliminated (for instance money in your current account can be eroded by inflation) but it is possible to manage it by spreading the risk. This is known as diversification. Different investments behave in different ways and are subject to different risks. Putting your money in a range of different investments can help reduce the loss, should one or more of them fall (like not putting all your eggs in one basket!).

It is also important to remember that risk and reward generally go hand in hand, the higher the risk the higher the potential reward. If you are not prepared to lose any of your money under any circumstances then you have to accept a lower level of return, and an investment is probably not a product you should be considering.

Generally the lower the risk, the lower the potential reward. So, for example, cash and gilts (fixed interest securities issued by the government) are the safest, but offer minimal returns, and shares are more risky, but offer higher potential returns.

How we can help

At Oakleaf, we use a Risk Profiling tool from Barrie & Hibbert to help gauge your attitude to risk and then depending on your investment objectives, we will recommend a solution, or range of solutions that will best fit your requirements. Like many things, our perception of beliefs often change and, therefore, we will test your attitude to risk on a regular basis to ensure you remain invested in a suitable range of investments.

The value of investments and the income from them may go down. You may not get the original amount invested.