What does low, medium and high risk mean?

We monitor all our client’s pension investments on a quarterly basis using powerful investment research software only available to financial advisers.

The table below shows three different risk level investments over the past five years:

Fund A (Blue Line) is an example of a high risk fund on our regularly reviewed investment panel. It has provided an average return over the past five years of 15.9% per annum over the last five years. However in the stockmarket crash of 2020 the fund fell between 35-40% in a short period of time, however as can be seen it has recovered.

High risk funds will give high returns but also high volatility (ups and downs) in the short term.

Fund B (Red Line) is a medium risk fund and has provided an average return of 10.1% per annum over the past five years. In the stockmarket crash last year it fell around 20% in a short period of time. Again, this has recovered in time.

Fund C (Yellow Line) is a low risk fund and has provided and average return of 4.9% over the past five years. In the same stockmarket crash last year it fell around 10% in a short time and recovered quicker than the higher risk funds.

As you will see all funds have their ups and downs, with more severity both ways with the higher risk level that is taken. All investment performance above does not including pension provider and other advice fees.

It is very important when taking pension income to plan for these investment ups and downs and with our expert independent advice we can put together a suitable portfolio with your pension to ensure your retirement plans have the best chance of remaining on track.

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