Diagnosing what 'risk' really means

Diagnosing what 'risk' really means

clock

Professonal Adviser's resident head doctor and behavioural finance expert Greg Davies on what 'risk' really means…

Risk: an important but misunderstood concept. Important, because investors should avoid it unless they are well rewarded for taking it. Misunderstood, because many investors don't appreciate what risk really is. Frequently, we are told, risk is volatility, a measure of the amount that investments fluctuate along the journey. But if this is what we expend effort avoiding, we're focusing on the wrong thing. A good analogy might be an urgent sea voyage: going full-engine into waves creates turbulence, which might be unpleasant, but - unless the turbulence slows the journey - it's n...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Investment

Quilter's WealthSelect rebalances in response to bond market

Quilter's WealthSelect rebalances in response to bond market

Following recent government bond market performance

Isabel Baxter
clock 17 January 2025 • 1 min read
PA Awards 2025: Multi-asset shortlists revealed

PA Awards 2025: Multi-asset shortlists revealed

The industry’s best in balanced, high yield, adventurous and cautious funds

Professional Adviser
clock 15 January 2025 • 2 min read
PA Working Lunch: Last chance - Seeking exceptional US growth with Baillie Gifford

PA Working Lunch: Last chance - Seeking exceptional US growth with Baillie Gifford

Join PA and Baillie Gifford on Wednesday for an informative online session

Jen Frost
clock 14 January 2025 • 1 min read