The bad new is pretty much all investments carry a degree of risk. The good news is not all investments carry the same level of risk; some offer a much lower level of risk than others. You just need to find investments that suit you.
Bear in mind that generally the higher the risk involved, the greater the potential rewards.
So what do we mean by risk?
There are two main types of risk, which often work in opposition to each other.
Inflation Risk
This is when inflation gobbles the value of your capital (the cash you put in). You're most exposed to this type of investment risk when your portfolio contains only products offering low rates of interest and products where your capital is guaranteed, often these are best if you're looking at the short to medium term.
Capital Risk
This is when you risk losing some or even all of your capital. Some people are happy to accept this, as this type of investment risk can potentially get you the most money back. You can reduce the impact of this risk if you invest your capital long-term.
Of course, the amount of risk you're willing to take is your decision.
Older people looking for a bit of cash in their retirement probably don't want to take the same risks as a young person who still earns and sees retirement as a long time away.
To figure out which investment suits you, ask:
"How much risk do I want to take?"
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