Risk and Reward
The link between risk and reward
Risk is linked to the growth potential of investments. Growth isn't guaranteed and investments might not perform as you'd expect. Generally, the greater the risk you’re prepared to take, the greater the potential for growth. But this could also bring a greater potential for losses particularly over the shorter term. The longer you invest, the longer your investments have to ride out the ups and downs of financial markets, such as the stock market.
If you plan to invest for a shorter time, you may be less willing or able to take a higher risk.
Being too cautious with your investments could mean ending up with less money than you need. While your savings are less likely to fall in value, they're also less likely to grow as much.
What’s your approach to risk?
It’s good having a view on how much you’d like your investments to grow. It’s even more worthwhile to think about how much you’d be comfortable losing if your investments don’t perform as you expected.