The different description of investor risk appetites below can help you to better understand the level of risk you should take when considering making investments.
Different people have different attitudes towards risk and it is important you understand what your level is so that you can build your portfolio to suit this.
Only you can judge what level of risk you are comfortable with.
Different investor’s risk profiles
In general, cautious investors prefer knowing that their capital is safe and they’re not too comfortable investing in equities – preferring to keep their money in the bank. Cautious investors, with time horizons of ten years or more, typically have portfolios with a majority of bonds and cash, with little exposure to equities or other higher risk investments. It is important cautious investors understand that their choice of investments may not keep pace with inflation or may fall short of their investment goal.
In general, moderately cautious investors would prefer not to take risk with their investments, however they can be persuaded to do so to a limited extent. They would prefer to keep their money in the bank but they may realise that other investments might offer a better return over a longer period of time. Moderately cautious investors, with time horizons of ten or more years, typically have portfolios with a majority of bonds and cash, but with some exposure to equities and other higher risk investments.
In general, moderate investors understand that they have to take investment risk to meet their long-term goals. They’re often more willing to take risk with at least part of their available assets. Moderate investors usually have some experience of investment, including investing in products containing higher risk assets such as equities and bonds. They can usually make up their minds on financial matters relatively quickly. Moderate investors, with time horizons of ten years or more, typically have portfolios with a mix of higher risk investments such as equities and lower risk investments such as bonds and cash.
In general, moderately adventurous investors are willing to take on investment risk and understand the nature of the long-term risk / return trade off. They’re willing to take risk with most of their available assets and are typically experienced investors, who have used a range of investment products in the past. Moderately adventurous investors will usually be able to make up their minds on financial matters. Moderately adventurous investors, with time horizons of ten years or more, typically have portfolios with a majority of higher risk investments such as equities, but that also contain bonds and cash.
In general, adventurous investors want the highest possible return on their capital and are willing to take considerable amounts of risk to achieve this. They’re usually willing to take risk with all of their available assets. Adventurous investors typically have substantial amounts of investment experience and will typically have managed their own investments. They usually have firm investment views and will make up their minds on financial matters quickly. Adventurous investors, with time horizons of ten years or more, typically have portfolios made up primarily of higher risk investments such as equities, with little in bonds and cash.
Once you have determined the level of risk you are comfortable with, you will then be able to choose investments that match your risk profile. If you are an existing Zurich plan member you can review your investment choices within your ZIO account, alternatively, you should seek the support from an independent financial adviser.