Investment Risk Scale

When investing funds in any format, you need to understand the
investment approach and risk involved in the planning you undertake.
Example investment risk categories when investing capital or income are as follows:

1-2
Lowest Risk
Very Cautious Risk

You are not prepared to accept any exposure to investment loss although you
are aware that any investment has some possibility of loss, for example if a bank
holding your money was to collapse. The value of your money may also fall in
real terms if inflation exceeds the return that your investment achieves. You
accept that the returns from your investments are likely to be low compared to
the potential returns from investments that have a higher risk rating.

3-4
Cautious Risk

You are prepared to accept a higher risk of capital loss in return for the
opportunity to earn more than from deposits and low risk type investments but
do not wish to take as much risk as with a medium risk strategy. While there can
be no guarantee, investments in this category are not likely to fluctuate in value
as sharply or as quickly as a portfolio largely made up of equity investments.

5-6
Balanced Risk

You are prepared to accept that the value of your investments will fluctuate
with the aim of achieving higher returns in the medium to long term. You accept
that there is an increased risk of capital loss over investing in more low risk
investments. Medium risk investments can fluctuate in value more rapidly and
quickly over a short periods of time than more low risk investments.

7-8
Adventurous Risk

You are prepared to accept fairly high levels of risk with your investments,
with the aim of achieving higher investment returns in the longer term. You
accept that this may mean that the value of your investments may fluctuate
considerably over a short periods of time and that there is an increased risk of
capital loss compared with a lower risk investment strategy.
Therefore, you may consider investments mainly in equities/shares and is likely
to involve investment in various overseas markets as well as UK markets. This
increases risk because of currency fluctuations as well as investment risk. Risk
can be reduced by diversifying your investments across sectors and markets

9-10
Highest Risk
Very Adventurous
Risk

You are prepared to accept high levels of risk with your investments, with the
aim of achieving higher investment returns in the longer term. You accept that
this may mean that the value of your investments may fluctuate significantly
over a very short periods of time and you could lose a significant proportion
(possibly all) of your investment.

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