All investments carry some level of risk. The key is making sure you make the right decisions based on your individual circumstances, and take into account the level of risk you are willing to take on.
The risk profile you choose reflects your perception of the acceptable trade-off between risk and the reward required for taking on that investment risk.
If you are willing to accept a high degree of risk, then the high-risk, high-return investment may be a viable alternative for wealth accumulation purposes. In contrast, if you are risk-averse you may find that a small decline in the investment may cause undue anxiety. If the possibility of such loss would make you lose sleep at night, a conservative low-risk, low-return, safer investment might be better suited for you.
The other factor that affects your risk profile is the investment planning time horizon. As a long-term investor, you can better afford to assume greater risks for better potential returns. However, as the planning horizon shortens, the risk of loss from shortfalls increases, and you may be less willing to bear risk and the overall risk profile of the investment mix declines.
Every investor's risk tolerance is different. In choosing a Fund the factors you should consider in consultation with your financial adviser include:
Your financial adviser will be able to help you assess your risk profile based on a full risk assessment looking at your needs and future retirement and investment goals.