risk calculation for portfolio approach

Investing is a great way to reach your financial goals and increase the value of your savings. It is also possible to accomplish this with the assistance of an experienced advisor, who can assist you in balancing your financial situation and comfort level with risk versus the need to increase your potential growth and the protection of your principal.

With investments, your and the savings of other investors are pooled together. A fund manager buys, holds and sells investments on your behalf. The majority of funds consist of a mixture of assets, which helps lower the risk of investing. However, some funds are more specific than others, like funds that focus on commodities or property. Multi-asset funds could hold a mix of different types of assets, like shares and bonds.

Some funds are geared towards a particular region or sector like emerging markets or green investment. Some also have a variety of specific investment objectives for instance, aiming at specific growth levels or reducing risk that is not systemically controlled. Others have a broad investment objective like low cost investing.

The type of unit trusts, OEICs and investment trusts you select will depend on the duration of your investment and your approach to risk. For instance, younger investors are more likely to accept more risk and are likely to choose funds with an increased proportion of equity. Alternatively, those approaching retirement or who have family commitments might want to take on less risk and choose an investment with more bonds.