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Attitude to Investment Risk Definitions

Which of these best describes your attitude to investment risk?

Low – 1

You would prefer no investments in stock markets whatsoever. You are prepared to accept the inflationary risk that this implies. Capital is guaranteed, however the growth potential is low. There are generally no entry charges. Investments in this area include Deposit accounts and Cash. The risk to capital is low and the growth potential is also low.

Cautious – 2

You would like to benefit from long term investment returns but are wary of stock market volatility. You would like to make some compensation for this volatility risk by means of lower risk investments. Investments in this area include investments with a low risk profile such as Cash, Gilts, Fixed interest, With Profits and Cautious Managed Funds. Growth rate tends to be higher than that of bank and building society accounts. The risk to capital is medium and the growth potential good.

Balanced – 3

You would like to take advantage of equity investments with the prospect of good long term returns. You can accept increased short term volatility, but not to the detriment of either your long term or short term financial security. Investments in this area include medium risk Managed Funds. The risk to capital is medium to high and the growth potential very good.

Speculative – 4

You would like some investment in higher risk investments which carry the risk of potential loss of capital. Investments in this area include investment in the stock-market or specialist unit linked funds for example, broad spectrum equity funds. The risk to capital is high and the growth potential is excellent.

Highly speculative – 5

You are willing to accept the risk of considerable loss of capital to gain potentially higher returns. Investments in this area include specialist investments and investment funds in particular asset types or certain geographic locations. The risk to capital is extreme and the growth potential is at a maximum.

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