Risk and Investments

You invest your money to see it grow. Risk is inherent to the concept of mutual funds, however.

Understanding Risk Levels

Some risks are more calculated than others. For example, a government savings bond practically guarantees that you will recoup your principal and interest at maturity. Equity funds, despite their advantages, do come with higher levels of risk.

To efficiently manage portfolio risk, you should:

• Establish your investor profile, with your financial adviser’s help. An investor with a greater appetite for risk will accept exposure to higher amounts of risk than a cautious investor. Before investing your money, you should establish realistic objectives and know your investor profile so you can properly manage the level of risk that you’re comfortable with, rather than exposing yourself to too much—or too little.



• Diversify your investment portfolio. When financial downturns occur, the greatest fluctuations often occur in equity funds. So your investment strategy should revolve around having a diversified portfolio that includes more conservative investments as well as those that are riskier. Your financial planner or adviser is really your best ally in establishing the right investment strategy.



• Have a long-term investment strategy. This way you can avoid reacting impulsively to the ups and downs of the market because you’ll know that mutual funds generally sustain their growth over the long run.
  
  And remember that when it comes to investment strategy, having time, patience, and discipline always works in the investor’s favor.



• Let a team of experts handle your investments. The mutual funds in your portfolio are managed by specialists who select stocks and conduct in-depth analyses before investing in them.



• Monitor your investments regularly. It’s recommended that you review your portfolio with your Desjardins adviser at least once a year. Your adviser will adjust your investment strategy as needed, based on changes in your financial and personal situation.