Investment portfolios – what is risk?

Finding the correct balance between return and risk and can be challenging for even investors with experience. While taking a certain amount of risk is sometimes essential when you seek to grow your current nest egg, it shouldn’t result in sleepless nights full of worry.

Defining risk

In investment circles, the term risk typically refers to market risk. Uncontrollable events like natural disasters, economic slumps and political upheavals all make investing via the stock market risky, as they can create considerable fluctuations in price.

Market risk can also depend on where you invest. For example, emerging markets are often seen as a riskier choice than investing in developed markets. However, there are other forms of risk as well, for instance longevity risk, which is the risk that an investor will outlive their savings, or currency risk, when money is lost due to swings in exchange rates.

Are you looking for help with portfolio management in Shropshire?

It is understood that as the interest rates offered for cash savings are exceptionally low, those who wish to grow their wealth will need to take on some market risk. Fortunately, financial experts can create diverse investment portfolios that cleverly balance risk with return.

If you have questions about risk and return, our dedicated team of experts will be happy to help. At Hartey Wealth Management, we offer a comprehensive portfolio management service and can tailor your investments to suit specific risk tolerances. For expert advice on your investment and to find out more about our services, get in touch today.

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