PSG answers your investments and insurance questions
I am 50-years old and spoke to a financial adviser recently who suggested that should not consider medium or high-risk investments however, I would like to ensure that I maximise my investments before retiring. Can you explain how an adviser assesses one’s risk appetite? Jonathan Fisher, Wealth Adviser, PSG Wealth, Sandton Grayston, Johannesburg
In financial planning, it is important to understand how different risk aspects may influence our decisions. There are three aspects that need to be considered:
The investment return required to reasonably aim to achieve your investment goal implies the need for a certain mix of asset classes. The different asset classes within a portfolio each have their own level of investment risk and volatility. Medium or high-risk investments refer to investment portfolios with more allocation to traditionally volatile asset classes like equities.
To stay the course and achieve your goals, it is important to understand, be comfortable with these risks, and not only to focus on the one-size-fits-all approach to asset allocation. Although lower-risk investments are prudent in the short-term, the investment horizon is not the only factor to consider.
