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How to analyze risk

The Risk of Not Taking a Risk

The Risks That Surround Investments

The Risks And The Rewards

Different investments will
react differently as market
conditions change.
Values Fultuate
Greater risk may result in greater reward but sometimes it leads to no reward at all.
Performance over 37 years - Asset Classes

Relative Performance of Various Asset Classes Over 37 Years.
Over time, changes in market conditions occur which effect the performance of the various classes of assets. Over the 37 year period between 1958 and 1995, the asset classes depicted in the above chart remained profitable and performed far above the rate of inflation despite experiencing brief periods of decline.

"You'll never eliminate risk entirely, but you can evaluate it and manage it by thinking long term, diversifying, using professional money managers and keeping a level head”.

It may sound odd, but a no-risk investment strategy is one of the riskiest financial approaches you can take. Inflation (loss of purchasing power) and taxation continually eat at your capital and returns, which is the biggest risk to fixed term investments such as GICs.

Investment risk and potential higher returns often go hand in hand, however market volatility can also be associated with risk. For instance, if your investment is prone to fluctuation and you need to sell when the price is down, you could lose some of your capital.

Even though mutual funds may share similar underlying securities to stocks and bonds, they are associated with different levels of risk and potential return ratios. Each individual investment has its own unique risk/reward factor that you should be aware of before making any investment decisions.

"Do you understand the risks?"

Ask yourself the following questions:

  • Do you have the time or resources to gain enough knowledge to become a stock or investment picker?
  • Do you have the confidence to choose investments that are suited to your risk tolerance?
  • Do you have the experience to build a plan that moves you towards your investment goals?
At Fiscal Agents, we can help you with any of the above matters with our professional money management services. We have the expertise to take the worry out of investing.

When we design a Cornerstone personal investment plan for you, we'll try to help you build a portfolio that maximizes market potential and is consistent with your comfort level of risk.

To get a better idea of the two-way effect of risk and return on investments, take a look at the charts on the right.

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