How do I know the right risk level for me?
As a general rule, the higher the risk of an investment, the more potential for higher returns. However, not everyone can take risks with their money over a certain level. Invest Forward looks at your profile and takes a number of factors into account prior to recommending a portfolio for you; however, we understand that we can't know everything about you. You may either accept our recommendation or pick the one that you feel most comfortable with. These are some considerations to think about prior to selecting a portfolio.
Time Horizon: A time horizon is the period between when an investment is made and when you expect to need the money. Typically, a shorter time horizon means that you should take on less risk.
Age: This is similar to time horizon above but in investing, being young has an advantage. You are able to wait a longer time for your investment to bear fruit. While young, you are also more secure, you do not have a lot of responsibilities, you have more disposable income, and you can pick yourself up easier when you make mistakes. Therefore, when you are young, you can get into investments that are riskier but can potentially earn above average earnings.
Objective: You may want to grow your money fast or your goal may be to preserve your investment in the safest way. Think about this when you are selecting a portfolio.
Attitude Toward Risk: Not everyone is comfortable with the ups and downs of the stock market. You may be so averse to risking your money that a potential higher rate of return may not be worth the stress and your losing sleep. If your personality is one who can accept losing money for the possibility of getting much more profit on your investment, choose aggressive investments. If you are the more conservative type, you should lean towards relatively safer investment allocations.