Managing investment risk
Focus on the key principles
Volatility in financial markets can affect investor and consumer
confidence. In times of market uncertainty and increased volatility
it's important to remember the key principles of risk management
for your investments:
- Diversification - As always, investors should
consider holding a diversified portfolio that is in line with their
risk profile. A diversified portfolio will mean you are less
exposed to a single economic event or geographic region.
Diversification within and across asset classes and industry
sectors is important, as is geographic diversification. A
well-diversified portfolio allows a fall in the value of some
investments such as international holdings to be offset by an
increase in the value of other assets. Learn more about diversification.
- Focus on your investment goals - Short
term volatility in financial markets may be unsettling but over the
long term you should be able to ride out these ups and downs. Short
term volatility isn't a reason to panic and sell your investments.
Where relevant, it's important to focus on your long term
investment goals, especially for retirement planning.
- Monitor your investments - Make sure you keep
track of what your money is invested in and monitor your
portfolio's performance. This can help you understand and manage
the risks of your investments and ensure your overall investment
goals are on track. If necessary, you may need to rebalance your
portfolio from time to time so it remains in line with your risk
profile. Learn more about keeping track of your
- Consider financial advice - If you need
assistance with developing a financial plan or selecting financial
products that are appropriate for your risk appetite, it can help
to seek professional financial advice.
- Beware of scams - When markets are
volatile scammers try to take advantage of investors. Find out how
to avoid investment scams.
In times of uncertainty and increased volatility
make sure you remember the key principles of risk management for
Last updated: 05 Dec 2016