High-risk investments can provide an opportunity for higher returns than other types of investments potentially produce.
Typical, however, these types of investments do put the money you invest at higher risk. If things go your way, the trade-off is that high-risk investments can deliver high returns for investors, making them a popular vehicle for those looking for long-term gains.
Examples of high-risk investments
Stock market funds and commodity funds are strong examples of high-risk asset classes.
Over the long term, experts agree that the stock market has a history of producing the highest returns – although past performance is not necessarily an assurance for the future.
However, in the short term, stocks can make for risky investments because of their inherent volatility. Equities have the biggest potential for growth and can generate rising income through dividends. If investors are willing to put their money in equities for a minimum of five years, they can potentially accrue long-term gains.
Due to their volatility, commodity funds are also considered higher-risk investments. Usually, these funds seek to track a range of natural resources and commodities and their underlying price. Access to this type of investments is typically received indirectly through exchange-traded products or manged funds.
Diversification to balance risk and return
Experts in portfolio management in Chester and Shropshire construct and manage investment portfolios that deal with commodities and equities. However, they balance these high-risk investment vehicles with other asset classes to reduce the risk and match each investor’s specific “risk tolerance”.
For an unbiased eye on your current portfolio, and to benefit from professional risk analysis, contact our team at Hartey Wealth Management.