A few years ago, my father walked into a popular high street bank with the intention of handing over a portion of his savings for them to invest on his behalf. As usual, the meeting he had with their adviser got down to the subject of risk. Was my dad a risk-seeker, or was he looking to take as little risk as possible on his investments? I suspect a fair proportion of people in these circumstances opt for somewhere in the middle (as did my dad). Looking at most (if not all) large high-street banks, they offer risk/return profiles bundled into neat little groups. Lloyds and Halifax for example have three risk ‘groups’ to pick from. Low, medium and high risk/return.
But is it really that simple? Surely everybody would like to maximise their return, therefore should they not all opt for the highest risk option?
Continue reading “Thoughts on Risk and Return”