However, out of 2,000 people surveyed only 8% said they have no understanding of the level of risk they are taking, while 42% said they understand the level of risk they are taking in detail.
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The survey showed a clear lack of understanding by investors of how much risk they are exposing their money to, despite 60% saying that when considering an investment the amount of money they might lose is a more important consideration than the amount of money they might gain.
According to the study, 69% of the respondents showed a relatively low tolerance for risk, whereas 5% of the investors responded to being ready for risk taking.
On being queried as to the maximum potential investment loss they would be prepared to accept in relation to a potential gain, the response was that they were prepared to accept a maximum potential loss of 14.91% for a potential gain of 27.37%.
Ryan Hughes, one of the portfolio managers involved with Skandia’s Spectrum range of risk targeted funds, remarked: "It is crucial that people decide how much risk they are prepared to take before they invest. They can then feel reassured that their investment experience will be one that matches their expectations, from both a return and risk perspective."
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By GlobalData"A very specific way to match an investment to a personal risk level is to choose a risk targeted fund which will have a specific risk score that investors can align with their own," he added.
