Glossary

One of the basic approaches to any form of investment is to ensure that you do not put your money into investments which do not match your risk profile. Clients can vary from conservative investors to aggressive investors, and their risk profile is usually obtained through a questionnaire approach coupled with discussions with their adviser.

Peace of Mind is what is desired – sometimes called the “Pillow Test” where you can sleep soundly at night without worrying about your investment.

However, the trade-off is that conservative investments eg cash or term deposits, are unlikely to provide a good return in the long-term and so make it less likely that you will be able to enjoy a comfortable lifestyle.

Generally, risk increases as we progress along the following train of investments: cash & term deposits – fixed interest eg Government bonds – property – Australian shares – international shares. But this comparison is not always the same ie sometimes fixed interest may be more risky than shares, and within categories there are more conservative and more aggressive investments eg mining shares are generally more aggressive than shares in banks.

Most clients end up with a mix of investment types and within the types a mix of individual investments. This is called diversification.