Determining the risk associated with various investments can be quite difficult and many factors can influence investment risk. This fact sheet shows a number of common investments and their potential risk and return, their ideal time frames and the types of risk that they may be exposed to. It has three main components which are listed below.
The time frame indicator
The time frame indicator shows the ideal length of time to hold the investment (shown in green). Holding the investment outside these time frames (shown in red) could increase the level of risk that may affect the investment as shown on the risk meter.
The return meter
The return meter is designed to indicate where the investment may typically fit with consumers desired or expected returns. Consumers expectations are usually related to their risk profile and needs and objectives.
The risk meter
The risk meter is designed to indicate the risk level that the investment may typically be exposed to, especially if it is invested outside the ideal time frame as shown on the time frame indicator.