Risks, taking them and avoiding them, are part of life, so it is no surprise that risk and your attitude towards it is one of the most important parts of us determining how you approach your financial situation.

Some people are very comfortable taking risks, while others don’t like it at all.

Maybe you already know where you sit on this scale. But even if you do, we’d still suggest talking to a financial adviser before making any big decisions, just to make sure.

Our advisers are happy to help and will gauge your attitude to risk in your meetings with them.

Investment Risk

Whether to invest your money or not, can be a difficult decision. On one hand it may mean your money will have the chance to grow but sometimes investments don’t deliver the expected results.  As financial advisers it is important for us to understand how much risk you are willing to take and with this information, we can help you make the choice that is right for you.

It’s also worth thinking about how much money you’d be comfortable losing. Or to put it another way, your ability to absorb any falls in the value of your investment.  This is called your capacity for loss.
Your capacity for loss, is how much you would be comfortable losing should your investments change and how this may impact your standard of living.

You can control

How diversified your portfolio is.
Diversification must be a key component of every long-term portfolio and is a tool to help you manage risk, when you have no way of knowing what’s going to happen.

Investing long term

Don’t react to short term changes in the market.  Staying invested for 5-10 years is best.  By chopping and changing you risk buying investments back at the wrong times.

You can’t control

The media

What’s going on around us and the way that the media portrays it, causes us to make decisions.  Keep your financial plan in mind, the noise may not be creating the right messages to help you achieve your goals.

How your investments perform

Stock markets are unpredictable, and you won’t always get things right. Although, holding a mixed bag could mean you’ve always got something performing well.

Risk in Retirement

When we talk about risk and retirement we can break it down into the following…

• Longevity Risk – The possibility that you will outlive your money
  
  
• Inflation Risk – Things may cost more tomorrow than they do today
  
  
• Volatility Risk – The risk of losing money you’ve invested
  
  
• Events Risk – Life isn’t always going to go according to plan, there will be events which could impact you financially

Each individual who plans for retirement must decide what level of risk they are willing to assume with their nest egg.  Some of these factors may include :

• A financial windfall or loss
• Inheritance
• Change in marital status
• Children’s Education
• Loss of a family member
• Personal health.

We are here to discuss your retirement options with you and create a risk assessment which outlines the possible outcomes when considering your pension pot.

Mortgage risk

Risk analysis also features at the start of your journey with us.
The questions we go through in an initial meeting about a mortgage are mainly to assess the affordability and risk involved.
We will discuss and ask you about

• Your current financial situation
• Your future financial situation
• How long you plan to own a home, have a mortgage or sell and buy a different home
• Any extra expenses you plan to incur (e.g. buying a car, starting a family etc.)
• The economic climate
• Interest rates
• The total cost of owning a home (e.g., property taxes, home repairs, condominium fees, etc.)
• How much your home may increase or decrease in value over time
• The potential for higher mortgage payments
• The risks of a drop in your income
• Your personal tolerance for debt and risk

So as you can see, the two come hand in hand but handled in the right way by one of our team of IFAs, we can make the prospect less daunting.

Call us on 01752 837950 to see how we can help.