Investment Risk



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Investment Risk

A common concern with any investment is that you may lose the money you invest - your capital. This risk is therefore often referred to as capital risk. But it does not end there as you also have market risk where the assets are priced by the market and subject to supply and demand - e.g. shares. There is also financial risk where your investment may be negatively impacted by the business risks of the underlying asset in which you invest. There is also liquidity risk as many assets may not be readily salable on the open market.

Even cash assets such as bank deposits are not risk free as you have things like interest rate risk to contend with. For example in a time of high interest rates, there is a risk that interest rates can fall and have a negative impact on future cash flows - this is known as interest rate risk.

All of this supports our theory that it is very important to align your investment goals with your risk tolerance. To achieve this we utilise the Morningstar Risk Assessment Questionnaire to gauge each individual's ability to withstand investment portfolio volatility as you work towards your financial dreams. This questionnaire has seven questions that help categorise each investor as part of an investor quantum. This quantum ranges from a Defensive investor, who is aiming mainly for income and does not want much volatility in the overall value of their portfolio, to an Aggressive investor, who is saving over a longer period and is mainly interested in growing the capital. From this information, we build your own custom-built portfolio, which is specifically for your needs.
As part of designing portfolios we apply stringent risk management strategies. We always apply maximum exposure limits to any one investment or investment strategies within a portfolio. We also utilise a range of research houses and analysts to provide individual investment recommendations. Investing has some very simple rules such as never put all your eggs in one basket. This sounds simple but it is amazing how often this is ignored. Also if something sounds too good to be true, it normally is!