How can I make low-risk investments

Investment Diversification

Asset classes tend to follow trends, so if you have all your assets in the one asset class, then you are open to the market's rises and falls. That's why experts recommend that you spread your investments to smooth out the risks.

When you are diversified the value of your investment portfolio won't be as affected by a drop in value of one company’s share price compared to investing entirely in the company. But remember not to spread yourself too thin - seek expert advice on the optimum way to diversify.

Time

The longer your money is invested, the better chance you have of reaching your goals. Time not only increases your chance of earning high returns, it protects your investment against volatile markets, creating more of a low risk investment.

Growth

Time to grow means time to benefit from the power of compound interest. Compound interest is calculated not only on your initial investment (your principal), but on your previously accumulated interest. So the longer you are invested, the more you benefit from compound interest (if your investment bears interest). It's a great way to grow your investment and achieve your goals.

Recovery

Investments such as shares that produce the best return over the long term often have the greatest risk of losing money over the short-term. These day-to-day price fluctuations are called volatility. By investing for the long term, you can smooth out volatility. Diversification spreads your investments and the risk. If you have a diverse portfolio, you can minimise your exposure to loss if one of your assets falls in value. You can also diversify within asset classes. If you were to buy shares you might diversify across industry sectors.

Investment Advice

Professional, informed, expert guidance is priceless. A licensed adviser can take the heat out of making investment decisions, and help you take control of your future. The right advice can set you up for life.

Regular contributions

You can gain real benefits from investing smaller, regular amounts over a long timeframe. This is known as dollar cost averaging.  You will sometimes buy at higher prices and sometimes at lower prices meaning the price you pay over time will be averaged out.