"Risk comes from not knowing what you are doing."
Warren Buffett
World Renowned Investor
Attitude to Risk
Real risk is doing nothing.
Nothing comes from nothing.
Ask yourself what would happen if you lost some or all of the money you’re putting into investments. Attitude to Risk (ATR) is subjective and is likely to be influenced by current events and/or recent experiences. Most all of us are uncomfortable with the idea of losing money. Defining your attitude to risk sets the parameters for your decision making helping you to avoid disasters and achieve your goals.
Here To Help
With a financial adviser on hand, you will be able to establish an attitude to risk that you and your finances are comfortable with.
Across all the pages in this section, we provide a series of guides to help you find what you should be looking for, particularly when it comes to building your attitude to risk. We can help you…
CHOOSE THE ADVISER WHO UNDERSTANDS YOUR NEEDS.
What is Attitude to Risk?
There are certain levels of risk when it comes to saving or investing. You need to decide on your own personal attitude to risk, your goals and when you wish to achieve them, and your personal circumstances. Your goals, and what you think you can afford to lose are the most important elements to establish your ‘risk appetite’. It can be very hard to measure this, as your attitude and circumstances can change regularly.
What does a financial adviser do to help?
With a financial adviser you can establish your risk appetite, considering the following;
- Awareness of what you can lose
Investments can go down as well as up, so it’s important to realise that over time you may not always be winning. If you’re aware of your limit for loss, you can start to factor this into your finances. Do you have people dependent on you? Consider these people before you make any investments. - Do you have goals?
What you chose to invest in will depend on your goals. Taking no risk at all means you may never reach your goal, so consider the form of investment you may need to make to reach what you have in mind.
Short-term goals, things like homes or cars are best saved for in cash. This would require a low level of risk; however, you may not always receive the best interest on these savings and can be a prime victim of inflation.
Long-term goals would usually require investing your money into assets with a better chance of beating inflation. You may find that in these cases the value is more volatile, but time allows it to grow and recover from short term losses. As your long-term goal moves closer, your attitude to risk would probably adjust. You could transfer funds to a less risky investment if you are close to the withdrawal date. - What is your personal risk attitude?
One of the best ways to keep the risk down is to spread your money across a selection of investments. Many events can affect the investment markets, so keep an eye on current affairs and the stock markets, possibly with the help of an adviser. It’s important to find the right level of risk for you, being too cautious could not benefit you in the long run.
Abacus Associates manages the personal wealth of many people across the UK and over £1 billion of investments, providing clients with financial advice and access to investment products and services.
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Abacus Associates is a trading style of Saltus Partnership Limited which is authorised and regulated by the Financial Conduct Authority. FCA reference number: 554381
Registered office: Solent Business Park, 4500 Parkway, Whiteley, Fareham PO15 7AZ. Registered number: 07586042
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